Cambridge International (CAIE) · 9 The macroeconomy (A Level) · 9.1 The circular flow of income
Cambridge International (CAIE) Economics past paper questions: The circular flow of income
Every Cambridge International (CAIE) question on The circular flow of income from 2023 to 2025: 1 essay and 13 multiple choice questions. It covers 10.3 Effectiveness of policy options to meet all macroeconomic objectives, 9.3 Employment and unemployment and 9.2 Economic growth and sustainability. Each question links to its paper, mark scheme and examiner report.
Essay questions on the circular flow of income
Multiple choice questions
- A-level Paper 3, June 2025, Q15
An initial injection into the circular flow of income causes a much larger increase in GDP. What does this define?
- A-level Paper 3, June 2025, Q16
An increase in a country’s inflation rate causes real incomes to decline, but consumers decide to maintain their living standards. What has increased?
- A-level Paper 3, March 2025, Q15
What does the accelerator principle explain?
- A-level Paper 3, March 2025, Q19
The diagram shows a closed economy with no government. It is in initial equilibrium when the national income is $1000 million. If the full employment national income occurs at $800 million, what is the value of the inflationary gap?
- A-level Paper 3, November 2024, Q19
The diagram shows full employment, national income, and expenditure (AMD). The economy is in equilibrium at J. What does the distance KL represent?
- A-level Paper 3, June 2024, Q19
Country X has a marginal propensity to consume (MPC) of 0.7. Its marginal propensity to save (MPS), marginal rate of taxation (MRT) and marginal propensity to import (MPM) are each 0.1. What is likely to lead to the biggest increase in the…
- A-level Paper 3, November 2023, Q15
What is most likely to lead to an increase in the size of the national income?
- A-level Paper 3, November 2023, Q17
The table shows the marginal propensity to consume (MPC), marginal propensity to save (MPS), marginal rate of taxation (MRT) and marginal propensity to import (MPM) for a four-sector economy. What is the size of the multiplier?
- A-level Paper 3, November 2023, Q19
The accelerator principle refers to a relationship between investment and
- A-level Paper 3, June 2023, Q18
Which statement best describes demand-induced investment?
- A-level Paper 3, June 2023, Q20
An open economy has injections, J, into the circular flow of income and withdrawals, W. If the full employment level of national income is OQ, what represents the inflationary gap?
- A-level Paper 3, June 2023, Q21
Which condition will produce the highest value of the national income multiplier in an open economy with a government sector?
- A-level Paper 3, March 2023, Q21
What does the accelerator principle state?
Question text is quoted from the question papers, © Cambridge University Press & Assessment (UCLES), for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.