Circular flow of income (OCR A-Level Economics): Flashcards
📚Flashcards
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14 cards from this deck
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Practise the cards
14 cards from this deck
Leakages
Leakages
Money flows out of the circular flow of income
Injections
Injections
Money flows into the circular flow of income
GDP
GDP
Total level of economic activity in an economy in a given period
2 economic agents in basic circular flow model
2 economic agents in basic circular flow model
Firms and households
What households provide to firms
What households provide to firms
Factors of production (land, labour, capital, entrepreneurship)
What households receive from firms
What households receive from firms
Income (wages, rent, interest, profits)
What households do with their total income
What households do with their total income
Spend on goods and services produced by firms
Three leakages in circular flow
Three leakages in circular flow
Savings, taxes, import expenditure
Three injections in circular flow
Three injections in circular flow
Investment expenditure, govt expenditure, export expenditure
3 methods to measure GDP
3 methods to measure GDP
Output, Income, Expenditure
Output method of measuring GDP
Output method of measuring GDP
Total value of goods and services produced
Income method of measuring GDP
Income method of measuring GDP
Total sum of income received (wages, rent, interest, profit)
Expenditure method of measuring GDP
Expenditure method of measuring GDP
Total sum of all expenditures made by individuals
Relationship: output, income, expenditure methods
Relationship: output, income, expenditure methods
Output = income = expenditure (all give same answer)