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Cambridge AS & A Level Economics

4.2Introduction to the circular flow of income

Introduction to the circular flow of income in Cambridge AS & A Level Economics: what the syllabus expects you to know, the learning objectives and how to practise.
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Learning objectives

What the syllabus expects you to be able to do.

  1. 4.2.1Describe the circular flow of income in a closed and an open economy, including the international sector.
  2. 4.2.2Explain injections and leakages (the multiplier is not required at AS).
  3. 4.2.3Explain equilibrium and disequilibrium in the flow (marginal and average propensities are not required at AS).

Lessons

  • The circular flow of income: injections, leakages and equilibrium

    50 min

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Sample question

A sample question on this topic. Answer it, check it, then read the worked answer.

Introduction to the circular flow of income: sample question

1 mark

In an open economy (US$ million) saving is 1,350, taxes are 2,100 and imports are 1,050. Calculate total leakages, in US$ million.

Answer in US$ million.

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