Topic-6- circular flow of income

Question 0

wealth

Answer 0

A stock of assets

Question 1

National income

Answer 1

The amount relieved by various agents in an economy e.g by households,firms and government

Question 2

Income

Answer 2

A flow of money

Question 3

Collateral assets

Answer 3

Used as security for a loan

Question 4

Correlation between income and wealth

Answer 4

if prices of houses (wealth) increases banks are more likely to lend money to those who’s houses have a higher value and are worth more than what they paid for therefore it can act as collateral

Question 5

Injections

Answer 5

an input into the circular flow of money e.g:

• investments
• government spending
• exports

Question 6

Leakages/withdrawal

Answer 6

an outflow of income in the circular flow of income e.g:

• imports
• taxes
• household savings

Question 7

Absolute poverty

Answer 7

Situation describing a household if it’s income isn’t enough for them to be able to buy the minimum bundle of goods and services needed for survival

Question 8

Relative poverty

Answer 8

situation applying to a household whose income falls below 60% of median adjusted household of disposable income.

-if a household has an insufficient income for its members participate in the normal social life of a country

Question 9

How can inequality in wealth lead to inequality in income

Answer 9

As wealth (ownership of assets) creates an income flow e.g rents and profits