2.4.1 National Income

• What do firms and households exchange in an economy?

  Resources and income

  
• What factors of production do households supply to firms?

  Labour, land, capital, and enterprise
• What do households receive in return for supplying factors of production?

  Wages, rent, dividends, and profit
• How do firms interact with households in the economy?

  By supplying goods and services

  
• What is the circular flow of income?

  Spending and income circulating in the economy

  
• What does national income equal in the circular flow of income?

  National output and national expenditure