Economics (AS & A Level) · Oct / Nov 2024 · Paper 13 · Question 16

In the circular flow of income model of an economy, Y, C, I, G, X, S, T and M represent total income, consumption, investment, government expenditure, exports, saving, taxation and imports respectively. Which statement is correct?

1. AAt equilibrium, the levels of Y and C are always the same.
2. BGovernments always adjust G so that the economy is in equilibrium.
3. CIf I is not equal to S, it is still possible for the national income to be in equilibrium.
4. DIf the national income is in equilibrium, X must be equal to M.

As printed in the paper