The National And International Econ0my
THE NATIONAL AND INTERNATIONAL ECON0MY
The output of an economy has a significant influence on its inhabitants’ living standards. The higher the output the more goods and services people can enjoy. The level of output is influenced by the total level of demand for the country’s goods and services. Some of the demand will come from foreign countries just as some of the goods and services produced will be sold to other countries.
THE CIRCULAR FLOW OF INCOME:-
The circular flow of income illustrates how the macro economy works. It shows how output generates income which is then spent and it shows the relationship between households, the government and the foreign trade sector
A TWO SECTOR MODEL:-
A simple model of the economy in which there are only two sectors, firms and households, is illustrated in Figure 26. I.
Firms are the producing units which hire services provided by the people from the households. For these services firms pay wages (for labor), rent......
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Approximate Pages: 13 (250 words per double-spaced page)
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