Aggregate demand & Circular Flow

Which of the following shows the most appropriate labels for the boxes marked X, Y and Z? 

•   X = Expenditure, Y = Banks, Z = Interest Payments

• B   X = Expenditure, Y = Banks, Z = Interest Payments

• C   X = Investment, Y = Government, Z = Wages

• D   X = Spending, Y = Firms, Z = Factors of Production

Which of the following would not be classified as a factor income?

• Hourly wage paid to a self-employed delivery driver

• A firm receiving payment for video streaming services

• Rental of a spare room

• Salary paid to the CEO of an organisation

Which of the following are injections into the circular flow of income?

• Household spending, wages and rent

• Government spending, investment and imports

•   Savings, capital and exports

• Investment, government spending and exports

The following shows some information about a small economy: - What can be deduced?

• Injections are greater than withdrawals and so the circular flow of income is shrinking

• Injections are greater than withdrawals and so the circular flow of income is expanding

•  Injections are less than withdrawals so the circular flow of income is shrinking

• Injections are less than withdrawals so the circular flow of income is expanding

• L = Investment, M = Land, Labour and Capital, N = Imports

• L = Interest, M = Factors of Production, N = Imports

• L = Imports, M = Expenditure, N = Injections

•  L = Investment, M = Output, N = Wages

Aggregate Demand = Consumption + __________ + Government Spending + Exports - Imports

The table shows the components of Aggregate Demand over two years for an economy (in billions of pounds).

What is the increase in AD between Year 1 and Year 2?

• -£10bn

• £110bn

• £10bn

• £20bn

Which of the following shows an accurate example for each of the components of Aggregate Demand in the UK? 

•  Consumption = Buying goods online, Investment = Buying shares in a company, Government Spending = Spending money on a new hospital, Exports = UK consumers purchasing foreign goods, Imports = Foreign consumers purchasing UK goods

• Consumption = Consumers paying Value Added Tax, Investment = Hiring more workers, Government Spending = Spending money on schools, Exports = Tourists from the UK spending in Germany, Imports = German tourists spending in the UK

• Consumption = Buying electrical goods on the highstreet, Investment = Firm purchasing new machinery, Government Spending = Spending money on public sector wages, Exports = Foreign consumers purchasing UK goods, Imports = UK consumers purchasing foreign goods

• Consumption = UK consumers purchasing goods abroad, Investment = Firm building a new factory, Government Spending = Spending money on benefit payments, Exports = German tourists spending in the UK, Imports = Tourists from the UK spending in Germany

Which of the following statements is true?

• Price Level increases, Real GDP decreases, AD extension

• Price Level decreases, Real GDP increases, AD contraction

• Price Level decreases, Real GDP decreases, AD extension

• Price Level increases, Real GDP decreases, AD contraction

If Katie saves €120 at a 4% annual interest rate, how much money will she have by the end of the year?

• €124.80

• €24.80

• €124

• €4