National Income Flashcards
1
Q
what are three injections into the circular flow?
A
- investment spending by firms
- government spending
- exports
2
Q
what are three withdrawals from the circular flow?
A
- saving by households - money not spent
- taxes paid to government
- imports bought by households and firms
3
Q
when will national income rise?
A
when injections are greater than withdrawals
4
Q
when will national income fall?
A
when injections are less than withdrawals
5
Q
what is the circular flow of income
A
a model of the economy which shows the flow of goods, services and factors and their payments around the economy
6
Q
what is a closed economy
A
an economy where there is no foreign trade
7
Q
what is an open economy
A
an economy where there is trade with other countries
