Figure 5.16 Circular Flow ModelFLLWGDPBTGOVBLFRXFEHMΤΡΑ Exercise 3: Population and the Circular FlowAs described in this chapter population change can impact GDP. Use Figure 5.16 of the circularflow model to explain what would happen if there was a sharp decline in population, and thushouseholds (H).1. What happened to consumption (C), savings (S), and taxes (T)?2. How could changes in C, S, and T impact firms (F) and their contribution to GDP?3. How could changes in C, S, and T impact government spending (G) and its contribution toGDP?

Keynesianism has made strides in its ability to solve economic downturns by government intervention,…

Answered: Figure 5.16 Circular Flow Model W GDP B…

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Figure 5.16 Circular Flow Model W GDP B T GOV B LF R T S X FE H M ΤΡΑ

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Question

Figure 5.16 Circular Flow Model
F
LL
W
GDP
B
T
GOV
B
LF
R
X
FE
H
M
ΤΡΑ

Exercise 3: Population and the Circular Flow
As described in this chapter population change can impact GDP. Use Figure 5.16 of the circular
flow model to explain what would happen if there was a sharp decline in population, and thus
households (H).
1. What happened to consumption (C), savings (S), and taxes (T)?
2. How could changes in C, S, and T impact firms (F) and their contribution to GDP?
3. How could changes in C, S, and T impact government spending (G) and its contribution to
GDP?

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