CAIE A-Level Economics 4.2 Introduction to the circular flow of income Question Bank

CAIE A-Level Economics 4.2 Introduction to the circular flow of income Question Bank
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise using circular flow models to track income, injections, leakages and equilibrium changes in closed and open economies.

Exam points

  • explain how moving from a closed to an open economy changes income flows and leakages
  • use tables to decide when planned injections equal planned withdrawals

Covered syllabus points

4.2.1—Circular flow of income4.2.2—Injections and leakages4.2.3—Circular flow equilibrium

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.

Question 15

[Maximum number: 1]

What is an example of an injection into the circular flow of income in an open economy?

A

consumer spending on goods

B

expenditure on a government construction project

C

spending by households on holidays abroad

D

repayment of loans to commercial banks

Question 17

[Maximum number: 1]

The table shows some data for an economy.

Table for Question 17 — CAIE A-Level Economics

What is the equilibrium level of national income?

A

$ 600 million

B

$ 700 million

C

$ 800 million

D

$ 900 million