In-depth discussion of the inter-relationships between participants.Identification of participants, flows, injections and leakages from a diagram.Aided with a circular flow and examples(using a graph and illustration).

(Nominal and Real prices, Basic prices, Factor cost, Market prices, Net Figures, Domestic and National figures and disposable national income).

National account aggregates and conversions.

Flows through different markets (production, income and spending)ĭeduce and analyse the national account aggregates and conversions.

Market for goods and services/ products.

Present the circular flow as a macroeconomic model The formula can also be written as K = 1 or α = 1ĬONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES It is a ratio which shows that the increase in income in a country will be greater than the initial increase in spending.

The multiplier is derived from the marginal propensity to consume. The marginal propensity to consume is what shows the amount of each rand that people will use for consumption within a country at a particular time. The most important of these aggregates is the Gross Domestic Product (GDP). The national account aggregates are an important means of analysing the performance of a country. The circular flow model, national account aggregates and the multiplier are three key terms in Economics.Īccording to the circular flow model, the three key sectors of the economy (consumer, business and government) all work together to ensure that society’s needs are provided for through the creation of goods and services.

Circular flow model