Economists measure economic activity using several approaches, namely income, expenditure, and output. All three will produce an equal number. How do all three approaches produce an equal number? Economists use circular flow diagrams (also known
Economic Activities
Economic Actors: Types and Roles
What's it: Economic actors refer to the participants in economic activities in an economy. They use productive resources and interact with each other with their respective motives and compensation, involving the flow of goods and income. Synonym
Gross National Income: Meaning, Formula, Difference with GDP and GNP
What's it: Gross national income (GNI) is the total aggregate income earned by citizens, regardless of where they make it. For example, for the Indonesia GNI, it means income earned by Indonesians abroad and those who live in Indonesia
Circular Flow of Income: Types and Descriptions
What's it: A circular flow of income model shows you the economy's movements of spending and income. Brief overview: In the economy, such flow is more complicated. It involves four macroeconomic sectors: And remember, the foreign
Aggregate Output: Meaning, Determinants, Effects on Economy
Aggregate output is the total value of goods and services produced in the economy during a certain period, usually one year. Economists typically use the gross domestic product (GDP) as its measure. The statistical bureau calculates it by adding
Aggregate Expenditure: Meaning, Components, Formula
Aggregate expenditure is the amount of spending on goods and services in an economy. It covers household consumption, investment expenditure, government spending, and purchases by foreigners. Usually, consumption covers the majority of aggregate
Aggregate Income: Meaning, Formula, How It is Measured
Aggregate income refers to the value of all income that suppliers of production factors receives over a specified period. The value will be equal to the value of aggregate output because it ultimately flows to the owner of the factors of
What is economic activity?
Economic activities refer to various activities to meet the needs and wants, and they involve money. Those activities include production, distribution, and trade, and consumption in the economy over a specified period. In aggregate, you can see
Accelerator Effect: Meaning, How It Works
An accelerator effect is an effect in the economy where small changes in the gross domestic product (GDP) result in changes in more substantial aggregate investment spending. That is the reason why we often see a surge in capital spending when the