Introduction to the Circular Flow of Income Quiz by Shubhrata Shrestha | May 26, 2025 | 0 comments Introduction to the Circular Flow of Income Quiz 1. In a closed economy, which sectors are involved in the circular flow of income? A. Households and firms B. Households and government C. Firms and international sector D. Government and foreign investors None 2. Which of the following is considered a leakage from the circular flow of income? A. Exports B. Investment C. Government spending D. Savings None 3. Which of the following would increase the circular flow of income in an open economy? A. Increase in imports B. Increase in taxes C. Increase in exports D. Increase in savings None 4. If total injections are greater than total leakages, the economy will likely: A. Shrink B. Enter into equilibrium C. Experience inflation D. Experience a trade deficit None 5. Which component is an injection in the circular flow model? A. Imports B. Taxes C. Government spending D. Savings None 6. When total leakages equal total injections, the economy is said to be in: A. Recession B. Disequilibrium C. Inflation D. Equilibrium None 7. Imports are considered a leakage because: A. They lead to higher interest rates B. They reduce government income C. They represent spending on foreign goods D. They increase consumer saving None 8. Which of the following is not a component of injections? A. Government expenditure B. Exports C. Taxes D. Investment None 9. What happens when leakages exceed injections? A. National income increases B. Economy remains stable C. National income decreases D. Output remains unchanged None 10. In an open economy, the circular flow includes: A. Only households and firms B. No government C. Households, firms, government, and foreign sector D. Only households and international investors None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
