9.1 The Circular Flow of Income Quiz by Shubhrata Shrestha | Jul 1, 2025 | 0 comments 9.1 The Circular Flow of Income Quiz Q1. What does the formula C = a + bY represent? A. Investment Function B. Consumption Function C. Savings Function D. Tax Function None Q2. If the MPS is 0.25, what is the value of the multiplier in a two-sector economy? A. 2 B. 4 C. 3 D. 5 None Q3. Which of the following is considered a leakage from the circular flow of income? A. Consumption B. Government spending C. Savings D. Investment None Q4. The Marginal Propensity to Consume (MPC) is calculated by: A. ΔY / ΔC B. C / Y C. ΔY / ΔS D. ΔC / ΔY None Q5. Which component is not included in Aggregate Demand? A. Consumption B. Investment C. Imports D. Government spending None Q6. If national income increases from $100 to $120 and savings increase from $10 to $15, what is the MPS? A. 0.2 B. 0.25 C. 0.3 D. 0.4 None Q7. What happens when injections exceed withdrawals in the economy? A. National income rises B. National income falls C. Deflation occurs D. Trade surplus increases None Q8. Which of the following causes a deflationary gap? A. AD < Full Employment Output B. AD > Full Employment Output C. AS > AD D. GDP rises rapidly None Q9. The APC (Average Propensity to Consume) is: A. ΔC / ΔY B. C / S C. C / Y D. Y / C None Q10. A four-sector economy includes households, firms, government, and: A. Financial institutions B. Foreign sector C. NGOs D. Central bank None Time's up Submit a Comment Cancel replyYour email address will not be published.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
