Answers to Revision Test 1

Answers to Revision Test 1 - BU1003 Economics for Business...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
BU1003 Economics for Business Revision Exercises 1. Use a flow diagram to explain the leakages-injections approach to GDP. Look at the two flow diagrams which I sent to you. When government spends money on consumption or capital goods and investment by investors are ingections into the circular flow model. When households consume imports it is considered a leadage. 2. Briefly explain what economists mean by the ‘production possibility frontier’. Check the conclusions on page 42 of the textbook and the diagram on page 40. In the figure you have drawn, illustrate the effect of an increase in the economy’s capital stock. They will not be asked about about that. I used PPF to explain to them the idea of having a limited capacity, whether it is a garden bed with tomatoes and flower or the economy as a whole – although the economy as a whole is more complicated. Relate it to full employment or potential GDP. 3. Explain the difference between a currency depreciation and appreciation.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Answers to Revision Test 1 - BU1003 Economics for Business...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online