The Circular Flow Of Income- Macro

Question 1

What is national income?

Answer 1

The total value of goods and services a country produces

Question 2

What is real gdp?

Answer 2

GDP that has been adjusted for inflation

Question 3

What is gnp?

Answer 3

Gross national product
- the value of all goods produced by a country annually

Question 4

What is nominal gdp

Answer 4

Gdp

Question 5

What does the circular flow of income show?

Answer 5

How firms and households interact and exchange resources in an economy

Question 6

What do households supply firms with?

Answer 6

The factors of production

Question 7

What do firms supply households with?

Answer 7

Goods and services
Wages and dividends

Question 8

What is an injection?

Answer 8

Money that enters the economy

Question 9

What is a withdrawal?

Answer 9

Money that exits the economy

Question 10

What are the 3 withdrawals?

Answer 10

Savings
Taxation
Imports

Question 11

What are the 3 injections?

Answer 11

Government spending
Investments
Exports

Question 12

What three things are equal in the circular flow of income?

Answer 12

Income = output = expenditure

Question 13

What are living standards?

Answer 13

A measure of the material welfare of households in an economy

Question 14

What is the multiplier effect?

Answer 14

When an initial injection into the circular flow of income causes a bigger final increase in real national income