GNI Etc

Question 1

What is Gross Domestic Product (GDP)?

Answer 1

The total value of goods and services produced within a country in a given period.

Question 2

What is Gross National Income (GNI)?

Answer 2

GDP + net income from abroad (remittances, foreign investments).

Question 3

What is the Circular Flow of Income?

Answer 3

A model showing the flow of income between households and firms.

Question 4

What do households provide to firms in the Circular Flow of Income?

Answer 4

Factors of production (land, labor, capital, enterprise) and receive income (rent, wages, profit).

Question 5

What do firms provide to households in the Circular Flow of Income?

Answer 5

Goods and services, receiving consumer spending in return.

Question 6

What is the role of government in the Circular Flow of Income?

Answer 6

Collects taxes and injects spending into the economy (public services, welfare).

Question 7

What are leakages in the economy?

Answer 7

Savings, Taxes, Imports (reduce economic activity).

Question 8

What are injections in the economy?

Answer 8

Investment, Government Spending, Exports (boost economic activity).

Question 9

What is the Multiplier Effect?

Answer 9

When an initial injection leads to a greater increase in total income/output due to repeated rounds of spending.