Economics Unit 4 Key Terms

circular flow model

a model of the economy in which the major exchanges are represented as flows of money, goods, and services between economic agents.

closed economy

a self-sufficient economy where no imports are brought in and no exports are sent out.

expenditure

the action of spending funds.

exports

goods and services produced domestically but purchased by people in another country.

factor market

a marketplace where factors of production such as labor, capital, and resources are purchased and sold.

fixed assets

assets purchased for long-term use and not likely to be converted quickly into cash, such as land, buildings, and equipment.

flow

an economic term describing how goods, services, and money move from one participant in the economy to another.

imports

goods and services produced in another country but purchased by people domestically.

income

money received, especially on a regular basis, for work or through investments.

injection

additions to investment, government spending, or exports that boosts the circular flow of income

input

another term for a factor of production, such as people, raw materials, energy, information, or capital.

leakage

outflow from a circular flow of income model, especially from taxes, savings, or imports.

open economy

an economy in which there are economic activities between the domestic community and outside nations.

output

the total value of all goods and services produced in an economy.

production

the processes used to transform inputs into goods or services.