5468166
Description
Flashcards by Sophie Knight, updated more than 1 year ago
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Created by Sophie Knight
over 8 years ago
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| Question | Answer |
| what is the difference between income and wealth? | Wealth is the sum of all the assets in an economy whereas income is the flow of money |
| What are the 3 injections into the circular flow of income? | 1. Investment 2. Government spending 3. Exports |
| What are the 3 withdrawals from the circular flow of income? | 1. Tax 2. Imports 3. Savings |
| What is the multiplier ratio? | The ratio of the change in equilibrium real income to the autonomous change (the injection) that brought it about (Number of times a change in incomes exceeds the change in net injections) |
| What is the most important thing in determining the size of the multiplier? | Size of withdrawals from the circular flow The bigger the withdrawals, the smaller the multiplier will be |
| what is the equation for the multiplier? | 1 MPW OR 1 (1 - MPC) |
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