Lesson 4.2.2.1

4.2.2.1 The circular flow of income Quiz: AQA Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.2.2.1, The circular flow of income: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. Which component is an injection into the circular flow of income?

    • Taxation
    • Savings
    • Imports
    • Government spending

  2. Which component is a withdrawal from the circular flow of income?

    • Investment
    • Exports
    • Imports
    • Government spending

  3. Which fundamental identity holds true in the national circular flow of income?

    • Savings = Investment = Taxes
    • Taxation = Spending = Debt
    • Income = Output = Expenditure
    • Imports = Exports = Output

  4. Nominal income rises from £60,000 to £66,000 while prices rise by 10%. What is real income?

    • £60,000
    • £72,600
    • £54,000
    • £66,000

  5. At what point does equilibrium national income occur in the circular flow?

    • Exports equal imports
    • Injections equal withdrawals
    • Taxes equal spending
    • Savings equal imports

  6. What is national income when all economic resources are fully used?

    • Nominal income
    • Equilibrium income
    • Real income
    • Full employment income

  7. If injections increase while withdrawals remain constant, national income will:

    • Fall to zero
    • Decrease
    • Increase
    • Remain unchanged

  8. How does an increase in the marginal propensity to save affect circular flow withdrawals?

    • Eliminates them
    • Has no effect
    • Decreases them
    • Increases them

  9. Injections are £120bn and withdrawals are £100bn. What happens to national income?

    • Stays constant
    • Falls
    • Rises
    • Halves

  10. Real national income adjusts nominal national income to remove the impact of:

    • Inflation
    • Savings
    • Taxation
    • Imports

  11. The basic circular flow identity states that national income equals expenditure and:

    • Taxation
    • Output
    • Investment
    • Savings

  12. Consumption is £300bn, investment £80bn, government spending £100bn, exports £120bn, imports £110bn. What is GDP?

    • £510bn
    • £490bn
    • £710bn
    • £470bn

  13. Nominal GDP is £2,200bn and the price index is 105. What is real GDP?

    • £2,205bn
    • £2,090bn
    • £2,310bn
    • £2,095bn

  14. Which real-world factor is omitted from basic circular flow models?

    • Injections
    • Withdrawals
    • Time lags
    • Households

  15. Saved money can re-enter the circular flow of income as an injection through:

    • Taxation
    • Government spending
    • Investment
    • Imports

  16. Full employment income is £800bn and actual income is £740bn. What is the output gap?

    • -£60bn
    • +£60bn
    • -£1,540bn
    • £0bn

  17. An increase in exports enters the circular flow directly as an increase in:

    • Tax revenue
    • Price level
    • Injections
    • Withdrawals

  18. If injections rise when an economy is at full capacity, what primarily increases?

    • Price level
    • Unemployment
    • Savings rate
    • Real output

  19. A country has per capita income of £20,000 and a population of 1 million. What is national income?

    • £2bn
    • £200m
    • £200bn
    • £20bn

  20. According to the circular flow model, national income, national output, and national expenditure are always:

    • Unrelated
    • Equal
    • Proportional
    • Inverse

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