national income
- Created by: Sophie.ellenx
- Created on: 08-04-21 11:11
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- circular flow of income - national output = national income = national expenditure
- national income
- equalibrium levels of real national output
- where AD and AS curves intercect, size of chnage will depend on size of shift and elascicity of curve which hasnt moved
- short term - both clasical and keynesian agree in ST ad will be downward and AS will be upward
- where AD and AS curves intercect, size of chnage will depend on size of shift and elascicity of curve which hasnt moved
- the multipllier
- an idea that an increase in AD increased because of an injection can lead to a further increase in national income
- the ratio of the final change in income to the initial change in injection
- size of multiplier is determined by how much an increase in income people will soend - MPC
- able to work due to circular flow - one persons spending is anothers income
- a negative multiplier - withdrawal - further fall in income
- 1/(1-MPC) or 1/MPW
- the multipllier
- an idea that an increase in AD increased because of an injection can lead to a further increase in national income
- the ratio of the final change in income to the initial change in injection
- size of multiplier is determined by how much an increase in income people will soend - MPC
- able to work due to circular flow - one persons spending is anothers income
- a negative multiplier - withdrawal - further fall in income
- 1/(1-MPC) or 1/MPW
- 1/(1-MPC) or 1/MPW
- a negative multiplier - withdrawal - further fall in income
- able to work due to circular flow - one persons spending is anothers income
- size of multiplier is determined by how much an increase in income people will soend - MPC
- the ratio of the final change in income to the initial change in injection
- effects of a change in AD
- for it to have a desired effect there must be sufficient spare capacity for extra output to be produced
- if AS is perfectly inelastic only impact of multipler will be an increase in price - the more elastic the cuve, the smaller the effect on price but bigger effect on output
- size of increase in AD depends on size of initial increase in AD and sizes of mulitplier
- for it to have a desired effect there must be sufficient spare capacity for extra output to be produced
- an idea that an increase in AD increased because of an injection can lead to a further increase in national income
- the multipllier
- 1/(1-MPC) or 1/MPW
- a negative multiplier - withdrawal - further fall in income
- able to work due to circular flow - one persons spending is anothers income
- size of multiplier is determined by how much an increase in income people will soend - MPC
- the ratio of the final change in income to the initial change in injection
- effects of a change in AD
- for it to have a desired effect there must be sufficient spare capacity for extra output to be produced
- if AS is perfectly inelastic only impact of multipler will be an increase in price - the more elastic the cuve, the smaller the effect on price but bigger effect on output
- size of increase in AD depends on size of initial increase in AD and sizes of mulitplier
- for it to have a desired effect there must be sufficient spare capacity for extra output to be produced
- an idea that an increase in AD increased because of an injection can lead to a further increase in national income
- equalibrium levels of real national output
- injections - additions income the economy - gov spending, investment, exports
- withdrawals - money is removed from the economy - taxes,savings, imports
- if sum of injections is higher than sum of withdrawals then economy will be growing
- national income
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