Q2

Q.2 Write out an explanation for each row.

Consumption – Consumers buy products with their income (-Cd) . Producers produce what is demanded and are paid (+Cs) for this.

Government Expenditure – The government buys goods/services (-Gd). Producers get the money in return for producing what is demanded (+Gd).

Output – This is all money spent on goods/services and is seen to be the total production of an economy.

Factor Income – Producers need a labour force to produce goods/services. This costs
(-W.Ns).The labour is provided by households who earn (+W.Ns).

Taxes – Households are charged taxes by the government (-Td) while the government receives this in order redistribute it for the public benefit.(+Td).

Change in money stock – Households will not always immediately spend but will save money which they may use to buy financial assets (- change Hh). . By the Government providing these financial assets they receive additional income to what to get in taxes. (+ change Hs)