National Income & Multiplier

Question 1

Circular flow of income

Answer 1

Model of economy & shows flow of g/s money & FofP

Question 2

National income

Answer 2

Value of output/expenditure/income overtime

Question 3

Income

Answer 3

Rent interest wages profit earned from wealth by econ actors

Question 4

Wealth

Answer 4

Stock of assets to generate flow of income

Question 5

Injections definition & examples

Answer 5

money put into economy
Eg - gov spending (G) exports (X) investment (I)

Question 6

Withdrawals (leakages) definition & example

Answer 6

Money taken out of economy
Eg- savings (S) taxation (T) imports (M)

Question 7

Economy grow when

Answer 7

Injections > leakages

Question 8

Economy declines when

Answer 8

Injections < leakages

Question 9

Injections = leakages means

Answer 9

Economys in equilibrium

Question 10

Inner circle on CFI

Answer 10

• g/s
• FofP

Question 11

Outer circle on CFI

Answer 11

• factor incomes
• c expenditure

Question 12

Multiplier

Answer 12

Change in component of AD … change national output

Question 13

Multiplier calc

Answer 13

1/(1-MPC) OR 1/MPW (MPS + MPT +MPI)

Question 14

MPS

Answer 14

Proportion of income that’s saved

Question 15

MPT

Answer 15

Proportion of income that’s taxed

Question 16

MPI

Answer 16

Proportion of income that’s invested

Question 17

MPT

Answer 17

Proportion of income that’s taxed

Question 18

MPC

Answer 18

Proportion of income that’s spent on g/s

Question 19

MPW

Answer 19

Proportion of income that’s withdrawn taken from CFI