National Income

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? Image: cf6c8570-3c09-4732-8925-c7a270c16db6 (image/png)	1. Investment 2. Government spending 3. Exports
What are the 3 withdrawals from the circular flow of income? Image: cf8b2aa9-6e9d-4cbe-bbf4-5b061cd5201e (image/jpg)	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)

Resource summary

	Created by Sophie Knight over 8 years ago