Topic 4: the macroeconomy

what is income

income is the fixed amount of money provided to workers in exchange for their service

what is the circular flow of income

how money and goods and services move around within an economy between the government, businesses and households

what is an open economy

an economy which engages with international trade with exports and imports

what is a closed economy

a country with no international trade, entirely self-sufficient, everything consumed is produced within the border

injections into the economy

government spending, investments, exports

leakages of the economy

taxation, savings, imports

what is gross domestic product

the total output by all factors of production within the specified economy, normally calculated for a year

what is gross national product

the total output by all citizens of a specific economy, even if they are using factors of production overseas, minus returns earned by foreigners within the national economy

what is gross national income

it measures the final value of incomes flowing to a specific country’s owned factors of production whether located in the specific country or overseas

what is gross national happiness

a policy that promotes and facilitates the wellbeing of people, there are nine domains of happiness that are divided into 72 happiness indicators, policies are screened by these indicators