Answered: Use the flow table and chart for help…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Use the flow table and chart for help with answering the following questions.

While national income and domestic product must be equal, income must also equal expenditure for each of the six sectors in the circular flow diagram: firms, consumers, government, financial system, investors, and the “rest of the world.” For example, the amount of (1)___________flowing into the consumers sector must equal the amount of (2) _________flowing out of this sector.

for 1 the choices are:
A. disposable income

B. consumption plus saving

C. saving

D. taxes

for 2 the choices are:

a. investment spending

B. consumption plus saving

C. disposable incomoe

D. transfers plus government purchases

Flow
Aggregate Demand
National Income
Disposable income (DI)
Investment spending (I)
Net taxes (NT)
Net exports (X - IM)
Consumption (C)
Government purchases (G)
O oo

Financial System
Expenditures
C+1
Rest of the
World
Consumption (C)-
Imports (IM)
Exports (X)
Investors
Consumers
Government
Firms
(produce the
domestic product)
Gross
Income
C1G+(X-IM)
stment (I)
nment Purchases (G)-
Saving (S)
isposable Income (DI)
Таxes
Transfers

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