Flow of income

    Cards (6)

    • what is the circular flow of income
      shows how money moves from firms and households
    • what are the two ways money flows
      firms pay household wages
      households pay firms with purchases
    • what is true about the speed of transfer
      the faster the transactions the greater the amount of economic activity
    • what are the 3 injections
      -government spending
      -investment
      -exports
    • what are the 3 leakages
      -taxes
      -imports
      -savings
    • how can injections and leakages be used
      by encouraging or discouraging each one you can control the speed of the economy
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