The Circular Flow and GDP
AP Macroeconomics · Flashcards · Recall
AP MACROECONOMICS · FLASHCARDS
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QUESTION
Define the circular flow of income.
QUESTION
What does the 'I' represent in the GDP formula?
QUESTION
State the formula for the income approach to GDP.
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ANSWER
G
D
P
=
W
a
g
e
s
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R
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I
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GDP = Wages + Rent + Interest + Profit
G
D
P
=
W
a
g
es
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R
e
n
t
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I
n
t
er
es
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P
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. Sums all factor payments earned in production.
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