CIRCULAR FLOW MODEL HOW TO

Decrease in GDP growth means that the output of an economy is still growing but at a slower rate. Provides an outline of the circular flow model for students to label Download 101KB. Second, the numerical simulations of impact flow over a free surface porous medium are discussed.

Decrease in GDP means that output of an economy is actually falling. You must also know the distinction between a decrease in GDP and a decrease in GDP growth.

Increasing government expenditure and shrinking tax revenue.

Recession occurs when GDP falls for at least two consecutive quarters, hence takes place shortly after booms/peaks (right when GDP begins decreasing):.

Growing tax revenue (possibly falling government expenditure on e.g.Recovery takes place after troughs right when GDP starts growing again:.Shortage of factors of production (most probably labour).The business cycle also known as the trade cycle shows growth of an economy around the long term trend (dashed line) measured by changes in GDP.Ĥ facts to know about the business cycle:

CIRCULAR FLOW MODEL HOW TO

How to Draw a Circular Flow Diagram Plan the timeline for information. The income in the circular flow is always equal to the national income, however this equilibrium does not necessarily mean the economy is at full employment. This model helps you determine the condition of the economy for maintaining stability. Income going into the flow is called injections and income going out of the flow is known as leakages.Įquilibrium of national income is reached when (planned) Injections = (planned) Leakages.

Circular flow model