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Circular flow of income

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Question 8

In an open economy with a government sector, the planned macroeconomic flows for the next fiscal year are projected as follows:

  • Household saving (SSS): £52 billion\text{£}52\text{ billion}£52 billion
  • Business investment (III): £48 billion\text{£}48\text{ billion}£48 billion
  • Government expenditure (GGG): £82 billion\text{£}82\text{ billion}£82 billion
  • Government taxation (TTT): £78 billion\text{£}78\text{ billion}£78 billion
  • Export revenues (XXX): £50 billion\text{£}50\text{ billion}£50 billion
  • Spending on imports (MMM): £44 billion\text{£}44\text{ billion}£44 billion

Circular Flow of Income Diagram

Which of the following statements correctly identifies the total value of injections and the net effect on the circular flow of income?

Total injections are £174 billion\text{£}174 \text{ billion}£174 billion, resulting in a net leakage of £6 billion\text{£}6 \text{ billion}£6 billion.

Total injections are £180 billion\text{£}180 \text{ billion}£180 billion, resulting in a net injection of £6 billion\text{£}6 \text{ billion}£6 billion.

Total injections are £180 billion\text{£}180 \text{ billion}£180 billion, resulting in a net leakage of £6 billion\text{£}6 \text{ billion}£6 billion.

Total injections are £174 billion\text{£}174 \text{ billion}£174 billion, resulting in a net injection of £6 billion\text{£}6 \text{ billion}£6 billion.

Circular flow of income Questions

  1. A Level
  2. /Economics
  3. /Circular flow of income