2.2 - CIRCULAR FLOW OF INCOME AND METHODS OF CALCULATING NATIONAL INCOME
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Practice Questions
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What does the circular flow of income represent?
💡 Hint: Think about who earns the income and who spends it.
Name the three methods of calculating national income.
💡 Hint: Remember the acronyms 'PEI' for Product, Expenditure, Income.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the circular flow of income?
💡 Hint: Think about the relationship between producers and consumers.
Which method sums value added at each production stage?
💡 Hint: Remember the method that emphasizes production.
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Challenge Problems
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If a nation reports a GDP of $1 trillion but has many informal sectors unaccounted for, how might this influence real economic conditions?
💡 Hint: Consider what happens when data does not fully capture the economy.
Explain how an increase in household spending can lead to a rise in national income through the circular flow model.
💡 Hint: Think about the relationship between production and income.
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