Macroeconomics-The Circular Flow Of Income

Front 1

State the 2 main economics agents within the Circular Flow of Income

Back 1

Householders and Firms

Front 2

Define the Circular flow of Income

Back 2

-Circular implies a flow of income from one economic agent to another in a circular motion
-Flow refers to the flow of money circulating an economy over a period of time

Front 3

List the withdrawals to an Open Economy

Back 3

SAVINGS
TAX
IMPORTS

WITHDRAWLS = T+S+M

Front 4

List the injections of an Open Economy

Back 4

INVESTMENT
GOVERNMENT SPENDING
EXPORTS

INJECTIONS= I+G+X

Front 5

State the concept of a simple flow of income

Back 5

-Firms hire the factors of production from householders to make goods and services
-Householders are paid and spend all income on the firms goods and services produced
CYCLES ROUND

Front 6

What if Investment if higher than Savings?
What are the affects?

Back 6

If investment if high, then incomes will rise therefore more people will save more money therefore the outbalanced savings will balance again and equilibrium, will be met.

Front 7

What is equilibrium in an economy?

Back 7

When there is a fine balance and a moment of rest.
The economy is at equality x=y

Front 8

What does equilibrium look like in an Open Economy?

Back 8

INJECTIONS = WITHDRAWLS
I +G +E =S +T +M