ILO:
a) The circular flow of income
b) The impact of injections into, and withdrawals from, the circular flow of income
c) The distinction between income and wealth
a) The circular flow of income
b) The impact of injections into, and withdrawals from, the circular flow of income
c) The distinction between income and wealth
Starter
How could an economy organise itself? (
feudal system
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How does our economy organise itself? (consider the lyrics in The Factory Gates) Bonus point; what was the name of the album and what does it refer to? |
Kaiser Chiefs: The Factory Gates - Lyrics
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Circular flow of income
Money flows around the economy between consumers/households and firms. (agents)
Consumption and income flows as financial flows for factors of production and goods and services. (exchange for)
Government spending (G), Investment (I) and Exports (X) are injections into the circular flow of income. (examples)
Taxation (T), Savings (S) and Imports (M) are withdrawals (or leakages) out of the circular flow. (examples)
Consumption and income flows as financial flows for factors of production and goods and services. (exchange for)
Government spending (G), Investment (I) and Exports (X) are injections into the circular flow of income. (examples)
Taxation (T), Savings (S) and Imports (M) are withdrawals (or leakages) out of the circular flow. (examples)
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How ONS statistics
explain the UK economy
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When injections are greater than withdrawals the amount of money in the circular flow increases, representing economic growth. When injections are less than withdrawals the amount of money in the circular flow decreases,
representing a fall in real GDP.
representing a fall in real GDP.
How might the following factors influence national income in the UK? (5 marks)
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Will the UK economy ever recover from the impact of coronavirus'?
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Bank of England to Step Up Talks on Negative Rates
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Revision material
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The circular flow model - revision video
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MCQ Revision - Injections and Leakages in the Circular Flow
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Income and Wealth
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Examine two causes of income inequality. (8 marks)
Income inequality in the UK
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Explain the risks of high inequality to society and the economy. (10 marks)
Why are so many children living in poverty in the UK? - BBC Newsnight
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Income is a ‘flow’ concept, earned overtime from employment or income generated off of wealth i.e. renting out a house.
Wealth is a ‘stock’ concept, which refers to the value of your assets at a given point in time that you have accumulated from investing past income into assests i.e. the value of your house, savings account, share portfolio and other assets you've invested into/own.
Wealth is a ‘stock’ concept, which refers to the value of your assets at a given point in time that you have accumulated from investing past income into assests i.e. the value of your house, savings account, share portfolio and other assets you've invested into/own.
If income increases this'll have a direct impact on wealth i.e. afford to invest into shares or a bigger more valuable house.
Therefore a decision must be made to forego current consumption in order to enjoy increased welfare in the future – that is, the opportunity cost of the increased future welfare is current consumption. Current consumption does not add to your wealth as the nature of the G/S within consumption often depreciate and you are unable to earn additional income from them i.e. you will not rent out your clothes.
Therefore a decision must be made to forego current consumption in order to enjoy increased welfare in the future – that is, the opportunity cost of the increased future welfare is current consumption. Current consumption does not add to your wealth as the nature of the G/S within consumption often depreciate and you are unable to earn additional income from them i.e. you will not rent out your clothes.
Task:
Research what is happening with income and wealth inequality in the UK?
What polices would the Government have available to reduce this? ( List of countries by tax rates )
Why do we want an element of inequality?
Research what is happening with income and wealth inequality in the UK?
What polices would the Government have available to reduce this? ( List of countries by tax rates )
Why do we want an element of inequality?
Case Studies
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Assess the benefits of the reintroduction of grammar schools to the UK economy (10 marks)
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What policies can you identify which could help reduce inequality and poverty in the UK?
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Grammar schools hurt the poor so why is Theresa May backing them?
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How to fix the gig economy - BBC Newsnight
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What do you think of Marx quote in the world today:
"In proportion as the exploitation of one individual by another is put an end to, the exploitation of one nation by another will also be put an end to. In proportion as the antagonism between classes within the nation vanishes, the hostility of one nation to another will come to an end." KARL MARX, The Communist Manifesto |
Income Inequality and Wealth Inequality I A Level and IB Economics
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