Circular Flow

Question 1

Injections

Answer 1

G, X, I

Question 2

Withdrawals

Answer 2

Savings, Taxes, imports

Question 3

What does the circular flow of income tell us

Answer 3

National income = National output = National expenditure

Question 4

Explain the multiplier effect

Answer 4

A change in any component of AD leads to a greater than proportional change in rGDP

Question 5

How do you calculate the multiplier effect

Answer 5

M = 1 / MPW
Or
M = 1 / 1-MPC