Circular Flow of Income
Economics ⇒ National Income and Related Aggregates
Circular Flow of Income starts at 12 and continues till grade 12.
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Describe the effect of an increase in exports on the circular flow of income in an open economy.
Describe the role of the government sector in the circular flow of income in a three-sector model.
Explain how taxes affect the circular flow of income.
Explain the concept of equilibrium in the circular flow of income.
Explain the difference between a closed and an open economy in the context of the circular flow of income.
If in an open economy, exports are Rs. 200 crore and imports are Rs. 150 crore, what is the net effect on the circular flow of income?
If total leakages in an economy are Rs. 500 crore and total injections are Rs. 600 crore, what will happen to the level of income?
In a two-sector model, if households save Rs. 100 crore and firms invest Rs. 100 crore, what will be the effect on the circular flow of income?
In the two-sector model of circular flow, which two sectors are involved? (1) Households and Government (2) Households and Firms (3) Firms and Government (4) Households and Foreign Sector
Which of the following is a real flow in the circular flow of income? (1) Payment of wages (2) Purchase of machinery (3) Supply of labour (4) Payment of rent
Which of the following is a withdrawal from the circular flow of income? (1) Investment (2) Government expenditure (3) Savings (4) Exports
Which of the following is an example of a leakage in the circular flow of income? (1) Government spending (2) Exports (3) Savings (4) Investment
Fill in the blank: In the circular flow of income, firms pay households for the use of _______.
Fill in the blank: In the circular flow of income, households provide _______ to firms in exchange for factor payments.
Fill in the blank: In the circular flow of income, the foreign sector is responsible for _______ and _______.
Fill in the blank: In the circular flow of income, the government sector collects _______ and makes expenditures.
State whether the following statement is true or false: 'Factor incomes received by households are spent entirely on consumption.'
State whether the following statement is true or false: 'In the circular flow of income, households are both buyers of goods and sellers of factors of production.'
State whether the following statement is true or false: 'In the circular flow of income, investment is always equal to savings.'
State whether the following statement is true or false: 'Injections and leakages are always equal in a disequilibrium situation.'
