Economics Flashcards
(10 cards)
What is the secular flow model?
A model that shows how the economy works and the relationship between income production and expenditure
What defines an open economy?
An economy that is open to foreign trade and includes the foreign sector
What is real flow in economics?
The movement of goods, services, and factors of production among the participants in the economy
How is expenditure calculated?
Consumption plus government expenditure plus investment plus exports minus imports
What is the calculation of total leakages from the circular flow?
Saving plus taxes plus expenditure on imports
What are leakages in the circular flow?
Withdrawals of money from the circular flow which reduce the quantity of money in the economy
What are injections in the circular flow?
The adding of additional money to the circular flow which increases the quantity of money in the economy
What causes leakages in the economy?
Saving, taxes, and expenditure on imports
What causes injections in the economy?
Investments, government expenditure, and export income
How is total injections into the circular flow calculated?
Investment plus government expenditure plus export income
