Formula for Circular flow

Question 1

What is Aggregate Demand

Answer 1

The total expenditure on the goods and services produced in an economy in a period of time.

Question 2

How to calculate aggregate demand

Answer 2

AD = C+I+G+(X-M)

Question 3

What is GDP

Answer 3

A measure of the monetary or market value of goods and services produced and sold in an economy in a given period of time (usually one year).

Question 4

How to calculate GDP

Answer 4

C + I + G + X

Question 5

What is net exports

Answer 5

X - M

Question 6

What is inflation

Answer 6

Inflationis a measure of the rate at which the average price of a basket of goods and services in an economy increases over time.

It indicates a decrease in the purchasing power of a nation’s currency.

Question 7

Under-employment:

Answer 7

A measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience and availability to work.

It refers to a situation in which individuals are forced to work in low paying or low skill jobs.

Question 8

‘UNEMPLOYMENT’

Answer 8

‘Unemployment’or joblessness is the proportion of the labour force actively looking for employment but not being able to find of job.