Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
8 Cards in this Set
- Front
- Back
State the 2 main economics agents within the Circular Flow of Income
|
Householders and Firms
|
|
Define the Circular flow of Income
|
-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 |
|
List the withdrawals to an Open Economy
|
SAVINGS
TAX IMPORTS WITHDRAWLS = T+S+M |
|
List the injections of an Open Economy
|
INVESTMENT
GOVERNMENT SPENDING EXPORTS INJECTIONS= I+G+X |
|
State the concept of a simple flow of income
|
-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 |
|
What if Investment if higher than Savings?
What are the affects? |
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.
|
|
What is equilibrium in an economy?
|
When there is a fine balance and a moment of rest.
The economy is at equality x=y |
|
What does equilibrium look like in an Open Economy?
|
INJECTIONS = WITHDRAWLS
I +G +E =S +T +M |