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Economics 2.4.1 and 2.4.2 and 2.4.3 - Coggle Diagram
Economics 2.4.1 and 2.4.2 and 2.4.3
income
flow of money going to factors of production
salary
profit, dividends or rent from abroad
measured over time
wealth
the current value of a stock of assets owned by someone or society
savings in a bank account
land, labour and capital
measured at a point in time
circular flow of income
economic model that shows how money flows through the economy
Injections
variables that add to the circular flow of income increasing the size of national income
exports
government spending
investment
G + I + X
in equilibrium, injections equal withdrawals
real GDP is boosted leading to economic growth
if injections > withdrawals economy is growing
withdrawals
variables that leave the circular flow of income reducing the size of national income
saving
taxation
imports
S + T + M
in equilibrium, withdrawals equal injections
real GDP falls leading to economic downturn
if withdrawals > injections economy is shrinking
national output
the flow of goods and services from firms to households
equilibrium national output
AS = AD
no tendency for the economy to change its output
national expenditure
the value of spending by households on goods and services
national income
the value of income paid by firms to households in return for land, labour and capital