According to the three-sector theory, all economic activity can be classified into one of three sectors: the primary sector, the secondary sector, and the tertiary sector. Keynesian Economic Theory. The equilibrium level of income refers to when an economy or business has an equal amount of production and market demand. That tells you what a country is good at producing. GDP is Gross Domestic Product and is an indicator to measure the economic health of a country. Circular flow of income in a three-sector economy There are three main sectors of economy consists of household sectors, business sectors and government sectors. In the figure below, OPBQ is known as the M ajor Sector and OPAQ is known as the M inor Sector. Relevance and Uses of Unemployment Rate Formula. Exports to ROW and imports from it disturb the equilibrium of an economy as mentioned in the previous section. The only exception is the shadow or black economy. When the economy opens up to foreign trade, it is said to have the fourth sector also to deal with. GDP is the country's total economic output for each year.It's equivalent to what is being spent in that economy. This type of economy is called a open economy. UK Essays PRO. Trusted by students since 2003. Four Sector Economy. Inherently, the unemployment rate is expected to increase when the economy is weak at which results in a scarcity of jobs. This measure of GDP adds together the value of output produced by each of the productive sectors in the economy … The formula to calculate GDP is of three types – Expenditure Approach, Income Approach, and Production Approach. Learn vocabulary, terms, and more with flashcards, games, and other study tools. For a four sector economy the formula for calculating national income is: Y = C + I + G + (X-M) Key Formulas in Macroeconomics GDP = C + I + G + Xn: The expenditure approach to measuring GDP GDP = W + I + R + P: The income approach to measuring GDP There are four main wealth-generating sectors of the economy: manufacturing, oil and gas, farming, forestry and fishing and a wide range of service-sector industries. K-sector) intact but divided the C-sector (i.e. Titled “The General Theory of Employment, Interest, and Money,” or simply as “The General Theory,” it is considered one of the classical works in economics. Mahalanobis realised that the basic heavy industries being capital-intensive will not ensure rapid expansion of employment opportunities and to bring the em­ployment aspect into sharp focus he put forward a four sector growth model in which he kept heavy industry sector (i.e. (A) When Taxation and Imports […] Start studying The Multiplier and Equilibrium Income in a 2-, 3- and 4-Sector economy. ... a summation of formula … In 1936, economist John Maynard Keynes published a text that would change the course of economic thought. A circle containing a sector can be further divided into two regions known as a Major Sector and a Minor Sector. This is where there are households, business organizations, government exist with the addition of exports and imports due to the presence of international trade. The four components of gross domestic product are personal consumption, business investment, government spending, and net exports. 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