HND经济学导论outcome2.doc

Assessment task 2 Assessment task instructions The UK economy is made up of millions of people and billions of economic activities. Within these activities, goods and services are created and exchanged. It can be complicated at times but a simple model explaining in general terms how an economy is organised and how those involved interact is a good start. Question 1 Draw a diagram showing the participants of the Circular Flow of Income and explain how it operates. The simple model is sufficient for a beginning, but an economy is more complex and involves external influences, which can raise or lower economic activity. Question 2 Identify three injections and three withdrawals from the Circular Flow of Income; give examples of each, and how they affect levels of economic activity. In the following table, there are examples of the growth rate of various countries over nine years Country United Kingdom United States Bulgaria Switzerland 1994 4.7 4.0 1.8 0.3 1995 2.9 2.7 2.1 0.6 1996 2.6 3.6 -9.4 0.3 1997 3.4 4.4 -5.6 1.7 1998 3.0 4.3 4.0 2.4 1999 2.1 4.1 2.3 1.6 2000 3.1 3.8 5.4 3.0 2001 1.9 0.3 4.0 1.3 2002 1.6 2.4 3.5 0.6 Question 3 Choose any two of the following questions: (a) Explain at least three difficulties encountered in measuring the National Income of a country. (b) Explain (using at least three reasons) why it is difficult to compare the growth rates of the countries in the table above. (c) Explain how the multiplier effect could substantially raise the level of National Income. (d) Explain the difference between real and nominal growth using the table above. Assessment task 2 Outcome(s) covered 2 Suggested solution and making an assessment decision Question 1 A circular flow diagram clearly identifying the following in their correct places: Firms: Households: Markets for factors of production: Land, labour, capital and wages, rent, profit and income. revenue spending Goods and services sold Goods and services bought Firms Households Production inputs