Skip to content
MathsGenie logo
Quick links
Open app

Course home

  1. A Level
  2. Economics Edexcel A
  3. Question bank

2.4.2 Injections and withdrawals

EasyMediumHard
123
Question 3

An open economy with a government sector experiences the following changes over the course of a fiscal year:

  • Households increase their savings by £12 billion.
  • Domestic firms increase their expenditure on new capital equipment by £15 billion.
  • The government reduces its spending on public infrastructure projects by £8 billion.
  • Domestic consumers spend £5 billion more on imported consumer goods.
  • Foreign buyers purchase £10 billion more of the economy's exports.
  • Total tax revenues fall by £4 billion due to a tax rate reduction.

Assuming no other changes, what is the net effect of these transactions on the circular flow of income?

A net injection of £4 billion

A net withdrawal of £4 billion

A net injection of £12 billion

A net withdrawal of £8 billion

2.4.2 Injections and withdrawals Questions

  1. A Level
  2. /Economics
  3. /2.4.2 Injections and withdrawals