Evaluate how the relative size of injections into and leakages from the circular flow of income can affect the ability of a government to achieve its macroeconomic aims.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. Identification of types of injections (J): investment, government spending and exports and withdrawals (W): saving, taxation and imports. Identification of macroeconomic aims. The impact of W and J on output, income and employment in relation to the circular flow of income. Explanation of potential conflicts between aims: inflation/balance of payments/growth/unemployment and effect on them if W>J or W<J.
2. L4 (18-25 marks): For clear definitions of injections and withdrawals and their size and impact on the circular flow of income, the government's macroeconomic objectives and possible compatibility/conflicts of aims. An evaluation of an imbalance in W/J on 3 macroeconomic objectives. (Max. of 21 if no conclusion).
3. L3 (14-17 marks): For clear definitions of injections and withdrawals and the government's macroeconomic objectives, impact on the circular flow of income, reference to compatibility/conflict of aims, explanation of an imbalance in W/J on 2 macroeconomic objectives.
4. L2 (10-13 marks): For a limited description of W/J and 1 macroeconomic objective.
5. L1 (1-9 marks): For an answer which has some basic correct facts but includes irrelevancies. Errors of theory or omissions of analysis will be substantial.