Circular Flow of Income Quiz

What role do exports play in the circular flow of income?

• They are a leakage

• They are an injection

• They are a withdrawal

• They are a factor of production

What happens when the rate of withdrawals equals the rate of injections in the economy?

• Inflation occurs

• The economy reaches equilibrium

• The economy collapses

• Exports increase

Which of the following is NOT a part of the circular flow of income?

• Consumer spending

• Factors of production

• Imports

• Inflation

What is the relationship between taxes and the circular flow of income?

• Taxes are an injection

• Taxes are a leakage

• Taxes are a factor of production

• Taxes are consumer spending

What does the circular flow of income illustrate?

• The relationship between income, output, and expenditure

• The process of government taxation

• The cycle of business investments

• The flow of international trade

What is the relationship between savings and investment in an economy?

• Savings are always higher than investment

• Savings are equal to investment

• Investment is always higher than savings

• Savings and investment are unrelated

What does the 'value added' method involve?

• Total value of consumption

• Final goods value less intermediate goods value

• Sum of all taxes

• Total imports and exports

What is a physical flow?

• Flow of money

• Flow of goods or services

• Flow of information

• Flow of capital

What is an example of a physical flow?

• Electricity

• Taxes

• Loans

• Investments

Which of the following could be a form of monetary flow?

• Electricity

• Taxes

• Water supply

• Internet services