National Income

Question 1

Wealth

Answer 1

A stock of assets

Question 2

What are examples of injections into an economy?

Answer 2

1. Government Spending (G)
2. Investment (I)
3. Exports (x)

Question 3

What are examples of withdrawals removed from an economy?

Answer 3

1. Taxes (T)
2. Savings (S)
3. Imports (M)

Question 4

How do you know if an economy is growing?

Answer 4

Injections > withdrawals

Question 5

What is marginal propensity to consume? (MPC)

Answer 5

The proportion of additional income that is spent on consumption rather than saving

Question 6

What is marginal propensity to save? (MPS)

Answer 6

The proportion of additional income that is saved.

Question 7

What is marginal propensity to tax? (MPT)

Answer 7

The proportion of additional income that is paid in taxes

Question 8

What is marginal propensity to import? (M)

Answer 8

The proportion of additional income that is spent on imports.

Question 9

Income

Answer 9

A flow of money.

Question 10

National Income

Answer 10

The total income earned by the factors of production in an economy in a given time frame.

Question 11

What is the formula for multiplier?

Answer 11

1/(1-MPC)

or

1/MPW

Question 12

Marginal Propensity to Withdraw (MPW)

Answer 12

The proportion of additional income that isn’t spend on domestic goods/services, but is either saved, taxed or spent on imports

(MPW = MPS + MPT + MPM)