national income definitions

Question 1

circular flow of incomes

Answer 1

model that shows flow of goods and services in an economy

Question 2

withdrawals

Answer 2

income taken out of circular flow

Question 3

injections

Answer 3

income can be put into the circular flow

Question 4

macro-economic equilibrium

Answer 4

when aggregate demand equals aggregate supply

Question 5

multiplier effect

Answer 5

process of increase in a component of AD leads to increase that I greater for role of AD

Question 6

multiplier

Answer 6

figure used to multiply a change in an injection into the circular flow such as investment to find final change in income

Question 7

national income

Answer 7

value of the output, expenditure or income of an economy over a period of time

Question 8

closed economy

Answer 8

economy where there’s no foreign trade

Question 9

marginal propensity to import - MPM

Answer 9

increase in imports divided by increase in income

Question 10

marginal propensity to save - MPS

Answer 10

increase in saving divided by increase in income

Question 11

marginal propensity to tax

Answer 11

increase in tax revenues divided by increase in income

Question 12

marginal propensity to withdraw - MPW

Answer 12

increase in withdrawals from circular flow divided by increase in income

= SAME AS MPS+MPT+MPM

Question 13

multiplier

Answer 13

figure used to multiply change in injection into circular flow , such as investment, to find final change in income
ratio of final change in. income to initial change in injection

Question 14

multiplier effect

Answer 14

increase in investment or other injection will lead to even grater increase in income

Question 15

national income

Answer 15

value of output expenditure or income of economy over [eriod of time

Question 16

open economy

Answer 16

economy where trade is with other countries

Question 17

wealth

Answer 17

stock of assets which can be used to generate flow of production of income

Question 18

withdrawals or leakages

Answer 18

in circular flow, spending by households which doesn’t flow back to domestic firms . includes savings, taxes and imports

Question 19

income method

Answer 19

total of all four factor incomes - wages rent interest profits

Question 20

output method

Answer 20

total of value added by every firm in the economy

Question 21

expenditure method

Answer 21

total of all final expenditure on consumer goods and capital goods by households firms gov and foreign residents