A-LevelEconomicsThe macroeconomy9708/12 · Feb/Mar 2023 · Q181 Mark

Which statement about the circular flow of income is correct?

AExports and imports do not affect the equilibrium level of national income because they always cancel each other out.

BThe greater the level of saving, the greater the level of injections in the form of investment must be.

CWhen consumers use past savings to increase their spending, there will be a rise in national income.

DWhen a government increases withdrawals by increasing the rate of income tax, there must be an equivalent increase in injections to compensate.

✓ Correct answer

C: When consumers use past savings to increase their spending, there will be a rise in national income.

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Topic: The macroeconomy, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Feb/Mar 2023 Paper 1 Variant 2, question 18.

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