CFI Multiple choice

Q1.
In the circular flow of income model, which one of the following equations is correct?

A Income = Output = Expenditure

B Income = Output = Injections

C Output = Expenditure = Withdrawals

D Expenditure = Income = Injections =

Withdrawals.

Q2.
Which one of the following is an injection into the circular flow of income of the UK?

A UK households buying goods from UK firms

out of their current income

B The purchase of raw materials by UK firms

from abroad

C UK firms retaining some of their income as

profit

D The government spending money on old age

pensions

Q3.

Real GDP is equal to nominal GDP after adjustment is made for

A the exchange rate.

B inflation.
C net income from abroad.
D indirect taxation.

Q4. The circular flow of income refers to

A the process by which households depend on each other.
B the movement of income and spending throughout the economy.
C the way in which the economy will always be in equilibrium.
D the relationship between factor incomes and factor services.

Q5. When planned injections equal planned leakages

A there will be macroeconomic equilibrium.

B household expenditure equals household income.
C factor incomes equal factor services.
D imports and saving will equal exports and investment.