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May 23, 2024

Explanation of circular flow

(a). Provide an explanation of the circular flow of income and expenditure.

(b). Define the construct of Gross Domestic Product (GDP). Does it include all the goods and services produced in an economy? If not, why does it leave out some goods and services? Please answer and explain.

(c). Provide a brief explanation of the income and expenditure methods for calculating GDP. Focusing on the expenditure method, provide an equation that lists out the different components of GDP and also explain what these different components include.

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