Theme 2: National Income

Question 1

Circular flow of income

Answer 1

Withdraws of income - taxes , saving , imports

Injections of income- gov spendings, exports, investment

Equilibrium when withdrawals and injections are equal

Question 2

Income and wealth

Answer 2

-income is a flow of money
-wealth is a stock of assets

Question 3

Impact of injections and withdrawals

Answer 3

-net injections > expansion of national output economic growth

-net withdrawals > contraction of production less economic growth