Economics (AS & A Level) · May / June 2025 · Paper 11 · Question 17

An open economy with a government sector is in equilibrium. Households in this economy save $100 million and firms spend $150 million on investment. Which combination of the budget balance and the current account balance would lead to an equilibrium position on the circular flow of income?

1. A$100m deficit budget balance; $50m deficit current account balance
2. B$100m deficit budget balance; $50m surplus current account balance
3. C$100m surplus budget balance; $50m deficit current account balance
4. D$100m surplus budget balance; $50m surplus current account balance

As printed in the paper