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Economics (AS & A Level) · Oct / Nov 2022 · Paper 33 · Question 24

9708The circular flow of income

Four students are asked to complete a table showing the aggregate demand equation and the multiplier formula for a closed economy without a government. Which student is correct?

  1. Aaggregate demand: C + I; multiplier: 1 / marginal propensity to consume
  2. Baggregate demand: C + I; multiplier: 1 / marginal propensity to save
  3. Caggregate demand: C + I – S; multiplier: 1 / marginal propensity to consume
  4. Daggregate demand: C + I – S; multiplier: 1 / marginal propensity to save

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Correct answer: B. aggregate demand: C + I; multiplier: 1 / marginal propensity to save

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