Circular Flow of income Model- a macroeconomic tool used to explain how economic activity
and country’s income are determined
Closed economy- country doesn’t trade or interact with other country for the purpose of
finace
open economy- country trade or interact with other country for the purpose of finace
expenditure approach- measures the value of all spending on goods and services in the
market
income approach- …
output approach- measures the actual value of the goods and services produced
consumption- all purchase byu consumers on last good + serveice
consumptioninvestment- firms obtain the funds for finance investment
government spending- consumers pay taxes to the government wich can be used to finance
goernment expenditure
net exports- measure of the national’s total trade
GDP- total value of gianl goods + serveices over the specific time period
GNI- sum of the income received by the redident of a country in a specific time period
nominal valuereal value-