Survey of Economics (MindTap Course List)
9th Edition
ISBN:9781305260948
Author:Irvin B. Tucker
Publisher:Irvin B. Tucker
Chapter11: Gross Domestic Product
Section: Chapter Questions
Problem 13SQ
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Question
The income and expenditure approaches to measuring a nation’s GDP can be combined using the circular flow model.
Categorize each flow in the following table as part of either aggregate demand or national income .
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 _________ (options for blank: disposable income, investment spending, saving, taxes) flowing into the financial system sector must equal the amount of ____________ (saving, consumpti0on plus savings, transfers plus government purchases, investment spending).
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