LS5-LS7 Flashcards
National income
Level of total output in an economy
Closed economy?
Economy where there is no foreign trade
Open economy
Economy where there is foreign trade
Who owns the wealth of the nation
Households
What do the households own
Stock of land
Labour
Capital used to produce goods and services
What do households supply these factors (land, labour,capital etc) to firms
In return for income
What does income include
Rents
Wages
Interest
Profits
What is income used to buy
Goods and services
What do firms produce?
Goods and services
Who do firms hire factors of production from
Households
The circular flow of income shows which three ways of measuring the level of economic activity?
National output
National expenditure
National income
What is national output?
Value of flow of goods and services from firms to households
What is national expenditure?
Value of spending by households on goods and services
What is national income?
Value of income paid by firms to households in return for land, labour and capital
What are injections?
Spending that does not come from households
