Question 4(a)
[Maximum number: 8]
With the help of a diagram, explain what is meant by the circular flow of income in an open economy and consider the extent to which it can explain economic growth in such an economy.
CAIE A-Level Economics 4.2.1 Circular flow of income
Practise reading and explaining circular flow diagrams for households, firms, government and the international economy.
How this is tested
- draw or interpret a circular flow diagram showing households, firms and income flows
- compare closed and open economy flows, including government and international sectors