2.2.

1 The circular flow of income

Year 1 content

How does money move around the economy?

In what ways can this flow of money increase?

In what ways might this flow decrease?

AQA 2.2 HOW THE MACROECONOMY

WORKS:
THE CIRCULAR FLOW OF INCOME,
AGGREGATE DEMAND/AGGREGATE SUPPLY
ANALYSIS AND RELATED CONCEPTS
 2.2.1 WHAT YOU NEED TO KNOW

 What national income measures

 The difference between nominal and real income
 Real national income as an indicator of economic
performance
 The circular flow of income concept, the equation
income = output = expenditure, and of the concepts of
equilibrium and full employment income
 The difference between injections and withdrawals into
the circular flow of income
 The effect of changes in injections and withdrawals on
national income
 2.2.1 YEAR 1 RECAP:

 What does national income measure?

 What is the difference between nominal and real income?
 Why is real national income an indicator of economic
performance?
 What is the circular flow of income?
 Explain the income=expenditure=output concept.
 What is meant by equilibrium and full employment income?
 What is the difference between injections and withdrawals?
 What are the effects of changes in injections and withdrawals
on national income?