Unit 28 Flashcards
What is the circular flow of income?
The circular flow of income is a model of the economy which shows the flow of goods, services and factors and their payments around the economy.
What is a closed economy?
A closed economy is an economy where there is no foreign trade.
Define income.
Rent, interest, wages and profits earned from wealth owned by economic actors.
What are injections?
Injections is spending which is not generated by households including, investment government spending and exports.
Define national income.
National income is the value of the output, expenditure or income of an economy over a period of time.
What is an open economy?
This is an economy where there is trade with other countries.
Define wealth.
Wealth is a stock of assets which can be used to generate a flow of production or income. For example, physical wealth such as factories and machines is used to make goods and services.
What are withdrawals or leakages?
Withdrawals or leakages in the circular flow of income is spending by households which does not flow back to domestic firms. It includes savings, taxes and imports.
