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- 1. Multiple Choice
Which of the following is NOT one of the five sectors included in the cicular flow of income model?
Individuals
Financial Institutions
International flows
Businesses
Entrepreneurs
- 2. Multiple Choice
What do individuals receive in return for supplying factors of production to businesses?
Rent
Wages
Profit
Interest
Food
- 3. Multiple Choice
What are the two choices that individuals have when they receive income rewards, according to the model?
Spend it
Donate it
Save it
Return it
- 4. Multiple Choice
Without individuals, businesses would not exist. WHY?
Because individuals supply the factors of production, such as labour and capital
Because individuals purchase the products that businesses produce
Because businesses couldn't borrow money without them
Because governments rely on individuals to vote for them
- 5. Multiple Choice
Why are exports classified as 'injections'?
Because exports can achieve disequilibrium via a slowdown in economic activity
Because exports slow business activity
Because exports increase the amount of money circulating in the economy as the payments come into the country
Because exports decrease the amount of money circulating in the economy
- 6. Multiple Choice
How can equilibrium be restored if government expenditure increases?
By lowering taxation
By increasing the levels of imports
By individuals increasing savings
By government increasing taxation
- 7. Fill in the Blank
Whenever total leakages are greater than total injections there will be a downturn
in the level of economic activity, with falling incomes, falling production and _____
unemployment.
- 8. Fill in the Blank
Whenever total injections are greater than total leakages there will be an _____ in
the level of economic activity,
- 9. Multiple Choice
How does an economy return to equilibrium after it goes through a growth phase?
The economy will not return to equilibrium
total leakages from the economy will also fall as consumers have less income to save ,
to spend on imports or to have collected as taxes.
People with higher incomes save more and spend more on imports, which raises leakages up to equilibrium
People with lower incomes save less and spend less on imports, which lowers leakages up to equilibrium
- 10. Multiple ChoiceImport meansbuying goods from another countryselling goods to another countryonly making one kind of product
- 11. Multiple ChoiceExport meansbuying goods from another countryselling goods to another countryonly making one kind of product
- 12. Multiple Choice
Which of the following are outcomes of leakages exceeding injections?
Increased unemployment
Falling wages
Increased production
Falling levels of consumption
- 13. Fill in the Blank
_____ are goods and services produced overseas but sold in Australia.
- 14. Multiple Choice
How does the government influence the circular flow?
It can create laws which require individuals to increase consumption
It can put its income in savings accounts
it can change
the levels of taxation and government revenue
it can educate consumers about their spending habits
- 15. Multiple Choice
In the table, what is happening to the circular flow?
Individuals are saving, which is reducing the amount of money in the circular flow each year
Individuals are taking money out of their savings accounts to spend on imports
The value of output is increasing
Households are spending more than they earn, which is causing economic growth
- 16. Multiple Choice
If all of the other sectors stay the same, what is the result of increased investment?
the level of savings reduces and individuals spend less
the government increase taxes
leakages outwegh injections, and the level of economic activity shrinks
Injections outwegh leakages, and the level of economic activity grows
- 17. Multiple Choice
Why does increased production of capital goods lead to increased demand for goods and services?
the level of savings reduces and individuals spend less
the government increase taxes, thereby reducing the injections to the economy, so people want more services
Capital goods require inputs to be useful, so demand for labour increases and people have higher incomes and more to spend
Injections outwegh leakages, and the level of economic activity grows
- 18. Multiple Choice
What 'flows' in the circular flow model?
Labour
Services
Goods
Money
- Answer choicesTagsAnswer choicesTags