national income

• circular flow of income


  describes how money and goods move around in an endless loop between different economic agents
• injections


  income that is entering the economy e.g. government spending, investment, exports
• leakages


  income that is taken out of the circular flow model e.g. taxation, savings, imports
• income


  money received on a regular basis
• wealth


  total value of all assets owned by firms or individuals
• multiplier effect


  occurs when an initial injection into the circular flow causes a bigger final increase in real national income
• negative multiplier effect


  occurs when an initial withdrawal of spending from the circular flow leads to knock-on effects and a bigger final drop in real GDP
• marginal propensity


  proportion of extra income put towards a certain use
• marginal propensity to save (MPS)

  interest rates and consumer confidence
• marginal rate of taxation (MRT)


  rate of taxation and political party in power
• marginal propensity to import (MPM)


  rise in disposable income, consumer preferences, appreciation of £ and state of global economy