GWC N5 Economics Circular Flow 2

The return for labour is wages. The return for land is ______ and the return for capital is ______.

• rent, interest

• interest, rent

• profit, rent

• interest, profit

Which of the following reflects the return to households for providing resources to firms?

• resources from the household sector to the business sector

• production from the business sector to the household sector

• incomes paid to households from the business sector

• spending (or expenditure) from the household sector to the business sector

Savings (S), Taxes (T) and Import spending (M) added together are known as:

• Injections

• Leakages

• levels of AD

• None of the above

Disposable income is calculated by

• Total income - total spending

• Total income - income tax

• Total income + bonuses and commissions

• Total incomes - saving

An increase in the level of leakages in an economy tend to have what effect on the economy?

• It tends to slow levels of consumption spending leading to more employment opportunities

• It tends to slow levels of consumption spending leading to less employment opportunities

• It tends to increase levels of consumption spending leading to more employment opportunities

• It tends to increase levels of consumption spending leading to less employment opportunities

Which of the following statements is INCORRECT about import spending?

• Import spending slows levels of consumption spending

• Import spending can rise if household incomes rise

• Import spending helps to grow another nation's economic growth

• Import spending can help to grow the UK economy

Injections act as an accelerator to the economy because it

• includes levels of government spending

• includes levels of export spending

• includes levels of private business investment

• all of the above

If the economy is weakening and heading towards to possible recession, the government can stimulate the economy by

• cutting back on levels of government spending

• raising levels of income tax

• cutting levels of incomes tax

• None of the above

A global recession is likely to effect the UK economy in what way?

• Export spending is likely to decrease

• levels of AD are likely to fall

• GDP and levels of output are likely to fall

• all the above

If a business decides to purchase new equipment and machinery for its business, this will stimulate injections via:

• household consumption

• private firm investment

• government capital spending

• none of these options