National Income Flashcards
(13 cards)
What is an economic agent ?
Someone that is affected by the economy
What do households provide firms with ?
Land
Labour
Capital
Entrepreneurship
What do firms provide households with ?
Goods and Services
What do households get from firms in return ?
Wages/Salary
Rent
Dividends
Interest
What do firms get in return from households ?
Payments of goods and services
What is a leakage? Give 3 examples
Where money leaves the an economy
Imports,taxes,savings (recession)
What is an injection? Give 3 examples
An injection is where money is flowing into an economy.
Exports,government expenditure,firms being productive.
What is an animal spirit?
The confidence of a firm
What does gdp refer to
The value of all finished goods in an economy
What is the multiplier effect?
Where an initial increase in injections leads to a bigger overall effect on society
Multiplier ratio formula
Total change in real GDP/initial injection
Marginal propensity ratio
1/(1-MPC)
*MPC is marginal propensity consumption
