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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 36

In an open economy, firms increase their planned investment spending by £45bn at the same time as the government cuts its capital expenditure by £15bn. As a result of these concurrent changes, national income rises by £54bn. Assuming no other changes to autonomous injections or leakages, the size of the multiplier is:

0.900.900.90

1.801.801.80

1.201.201.20

0.560.560.56

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts