The relationship between businesses and households determines how income and output flow through the economy. Businesses purchase resources (such as labour) from households and use them to produce goods and services, which they sell to households in exchange for part of the income households earn in selling their resources to businesses. Therefore, there is a circular flow of output and income that is coordinated by four macroeconomic markets: goods and services, resources, loanable funds, and foreign exchange. As GDP can be computed either by summing the value of output produced over a given period of time (which is equivalent to adding up the spending of consumers, investors, the government, and foreigners) or income payments (wages, rents, interest, and profit) over a given period of time, the circular flow model implies that aggregate expenditure must equal aggregate income. national income, The following table lists two sectors of the economy. taxes plus government borrowing, net saving plus net capital from foreigners Fill in the table with what flows into that particular sector in the first column and what flows out of the sector in the second column. Sector Amount Flowing In Amount Flowing Out Government Financial market investment plus govrnment borrowing, consumption + net saving +net taxes, government purchases
The relationship between businesses and households determines how income and output flow through the economy. Businesses purchase resources (such as labour) from households and use them to produce goods and services, which they sell to households in exchange for part of the income households earn in selling their resources to businesses. Therefore, there is a circular flow of output and income that is coordinated by four macroeconomic markets: goods and services, resources, loanable funds, and foreign exchange. As GDP can be computed either by summing the value of output produced over a given period of time (which is equivalent to adding up the spending of consumers, investors, the government, and foreigners) or income payments (wages, rents, interest, and profit) over a given period of time, the circular flow model implies that aggregate expenditure must equal aggregate income. national income, The following table lists two sectors of the economy. taxes plus government borrowing, net saving plus net capital from foreigners Fill in the table with what flows into that particular sector in the first column and what flows out of the sector in the second column. Sector Amount Flowing In Amount Flowing Out Government Financial market investment plus govrnment borrowing, consumption + net saving +net taxes, government purchases
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:The relationship between businesses and households determines how income and output flow through the economy. Businesses purchase resources
(such as labour) from households and use them to produce goods and services, which they sell to households in exchange for part of the income
households earn in selling their resources to businesses. Therefore, there is a circular flow of output and income that is coordinated by four
macroeconomic markets: goods and services, resources, loanable funds, and foreign exchange.
As GDP can be computed either by summing the value of output produced over a given period of time (which is equivalent to adding up the spending
of consumers, investors, the government, and foreigners) or income payments (wages, rents, interest, and profit) over a given period of time, the
circular flow model implies that aggregate expenditure must equal aggregate income.
national income,
The following table lists two sectors of the economy.
taxes plus government borrowing,
net saving plus net capital from foreigners
Fill in the table with what flows into that particular sector in the first column and what flows out of the sector in the second column.
Sector
Amount Flowing In
Amount Flowing Out
Government
Financial market
investment plus govrnment borrowing,
consumption + net saving +net taxes,
government purchases
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