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Circular flow of income

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Question 2

An open economy is described by the following macroeconomic data:

  • Savings (SSS): £45 billion
  • Investment (III): £55 billion
  • Government spending (GGG): £70 billion
  • Taxation (TTT): £65 billion
  • Imports (MMM): £40 billion
  • Exports (XXX): £35 billion

Which of the following statements is correct?

Total leakages (withdrawals) exceed total injections by £10 billion, causing national income to contract.

Total injections exceed total leakages (withdrawals) by £10 billion, causing national income to expand.

Total injections are £125 billion, and total leakages (withdrawals) are £110 billion.

Total injections exceed total leakages (withdrawals) by £20 billion, causing national income to expand.

Circular flow of income Questions

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