Cambridge AS & A Level Economics
9.1The circular flow of income
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.
Subtopic67 practice questions3 lessons
Learning objectives
What the syllabus expects you to be able to do.
- 9.1.1Define the multiplier and state the formulae for it in a closed and open economy, with and without a government sector.
- 9.1.2Calculate the propensities to save, consume and import and the rates of tax (average and marginal).
- 9.1.3Use the multiplier to calculate the effect of a change in AD on national income.
- 9.1.4Explain the components of AD and their determinants: consumption and savings functions, autonomous and induced investment, the accelerator, government spending and net exports.
- 9.1.5Explain the full employment and equilibrium levels of national income, and inflationary and deflationary gaps.
Lessons
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Consumption, saving and investment functions
60 min
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National income determination and inflationary and deflationary gaps
60 min
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The multiplier
60 min
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Sample question
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