
Circular Flow Model of Income and Spending Quiz

Interactive Video
•
Business
•
12th Grade
•
Easy
John Tillotson
Used 1+ times
FREE Resource
10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the primary role of households in the circular flow model?
To export goods and services
To produce goods and services
To buy goods and services and receive income
To collect taxes
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is the largest component of aggregate demand in the UK economy?
Government spending
Business investment
Consumer spending
Exports
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How do governments create a leakage in the circular flow model?
By collecting taxes
By providing welfare support
By exporting goods
By importing goods
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is an example of an injection into the circular flow model by the government?
Collecting income tax
Building new social housing
Imposing VAT
Increasing national insurance
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens when money leaves the circular flow in the form of imports?
It increases aggregate demand
It boosts consumer spending
It creates a leakage
It generates foreign currency inflows
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is the external trade sector particularly important for highly open economies?
Because it increases the rate of taxation
Because it directly links a large portion of GDP to exports and imports
Because it limits government spending
Because it reduces the value of GDP
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What role does the financial sector play in the circular flow model?
It channels savings into loans and investments
It provides welfare benefits
It collects taxes from businesses
It imports goods and services
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