Real Theme 2 Macro Flashcards
1
Q
Circular flow withdrawals?
A
- imports
- savings
- taxes
2
Q
Circular flow injections?
A
- exports
- government spending
- investment
3
Q
If expenditure on goods and services is greater than rent,wages,profits,interest than the economy is…
A
Growing
4
Q
AD=
A
C+G+I+(X-M)
5
Q
Accelerator theory-
A
Firms will make an investment when incomes are rising and demand.
6
Q
Real GDP
A
Taking into account inflation with the output(Y)
7
Q
The multiplier effect
A
When an initial injection into the economy has a greater change in the final national incomes or GDP
Final increase in GDP / initial investment is one way of working it out
8
Q
The multiplier effect formulas to note:
A
MPC+MPS= 1 marginal propensity to consume + …to save
K=1/MPS
K=1-MPC
K= final increase in GDP/ initial investment
9
Q
Visible
Invisible imports
A
Products are visible services aren’t
