hnd_经济学outcome_2

HND经济学学导论outcome2

Diagram of circular flow of income

enterprise

HND经济学学导论outcome2

Injections and withdraws

Know definitions, examples, and influence on the circular flow of income. There are 3 sets of injections and withdrawals which can alter the circular flow of income in an economy. Injection (J) is money entering the flow. Injections include Investment, government spending and Exports. Withdrawal (W) is money leaving the flow. Withdrawals include saving, taxation and imports.

HND经济学学导论outcome2

Investment

In economics, investment is buying and producing capital goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or onthe-job training), etc. More investment means that more production and more employment, and more income circulate and thus economic activity is increased.

HND经济学学导论outcome2

Saving

In economics, personal saving has been defined as personal disposable income minus personal consumption expenditure. For example, households deposit money into banks or other financial institutions, or just retain money in treasuries. If a country saves too much of its income this is withdrawn from the circular flow and the flow will decrease. This means that less income circulates and economic activity is reduced.

HND经济学学导论outcome2

Government Spending (G) and Taxation (T)

Government taxes both the household and business, so that taxes (T) are withdraw. Example: direct tax (income tax) and indirect tax (sales taxes). In detail, value added tax (VAT), Capital gains tax, Corporation tax, Environment Affecting Tax, Inheritance tax, Property tax, etc. Increasing taxes will decrease disposable income, thus less income circulates and economic activity is reduced. The government purchases goods and services from the business, and gives transfer payments, so that government spending (G) is injection. (G) includes: investment directly into the economy in the form of grants, business allowances, investment in roads, hospitals, housing, investment in nationalised industries, and the Welfare State, pensions, unemployment benefits and other transfer payments (TP). Increasing investment and spending by government will increase employment and production, thus more income circulates and economic activity will be increased.

HND经济学学导论outcome2

Exports (E) and Imports (M)

Exports: goods and services are produced in one country and sold abroad. The payment for them will return to the firms in this country. Thus, it is an injection. Example: This increases the circular flow and creates more economic activity in the economy. Imports: goods and services which are bought from other countries and constitute a withdraw from the circular flow of income and enter the flow of income of another country. Example: This decreases the circular flow and causes less economic activity in the economy.

HND经济学学导论outcome2

Difficulties of measuring National Income

1. 2. 3. 4. 5. Arbitrary de

HND经济学学导论outcome2

HND经济学学导论outcome2

HND经济学学导论outcome2

HND经济学学导论outcome2

HND经济学学导论outcome2

HND经济学学导论outcome2

HND经济学学导论outcome2

HND经济学学导论outcome2

HND经济学学导论outcome2