1national income
total value of all the goods and services produced by a country in a year
2national income =
national output = national expenditure
3wealth
value of the total assets owned by an individual, firm or country
4income
flow of money received by factors of production
53 injections into the circular flow of income
government expenditure, investment, exports
63 withdrawals from the circular flow of income
savings, taxes, imports
7multiplier
the amount by which a chnage in an injection or withdrawal causes total income to change
8multiplier =
change in real GDP / change in injections
9value of UK multiplier
between 0.9 and 1.7
10the multiplier is … in developing countries
higher
11marginal propensity to consume (MPC)
the proportion of an increase in income that is spent
12MPC =
change in consumption / change in income
13equation linking K and MPC
K = 1 / 1 - MPC
14marginal propensity to save (MPS)
the proportion of an increase in income that is saved
15MPS =
change in savings / change in income
16equation linking K and MPS
K = 1 / 1 - MPS
17marginal propensity to tax (MPT)
the proportion of an increase in income that is taxes
18MPT =
change in tax / change in income
19marginal propensity to import (MPM)
the proportion of an increase in income that is spent on imports
20MPM =
change in imports / change in income
22equation linking k and MPW
K = 1 / MPW