Lesson M1.1.1

M1.1.1 Circular flow, injections and leakages, and measuring national income Quiz: OCR Economics, Unit 6

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson M1.1.1, Circular flow, injections and leakages, and measuring national income: 20 multiple choice questions for the OCR Economics (H460), Unit 6: Aggregate demand and aggregate supply, written with Revision Ninja.

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The 20 questions

  1. In the two-sector circular flow model, what do households supply to firms?

    • Consumer spending
    • Goods and services
    • Factors of production
    • Transfer payments

  2. Which of the following is defined as a leakage from the circular flow of income?

    • Savings
    • Government spending
    • Exports
    • Investment

  3. Which injection into the circular flow originates from foreign demand for domestic output?

    • Exports
    • Imports
    • Investment
    • Taxation

  4. Which equation correctly represents the equilibrium condition for national income in an open economy?

    • S + T + M = I + G + X
    • S + I + G = T + M + X
    • S + T + X = I + G + M
    • I + G + M = S + T + X

  5. What term describes total income generated within a nation's borders, regardless of owner nationality?

    • Gross National Income
    • Disposable income
    • Gross Domestic Product
    • Net National Income

  6. How is Gross National Income calculated from Gross Domestic Product?

    • Add net income
    • Add government spending
    • Subtract indirect taxes
    • Subtract net imports

  7. What measure accounts for capital consumption subtracted from Gross Domestic Product?

    • Real Disposable Income
    • Gross National Product
    • Gross Value Added
    • Net Domestic Product

  8. Which method of measuring GDP sums all value added at each stage of production?

    • Income method
    • Expenditure method
    • Output method
    • Consumption method

  9. If savings are £50bn, taxes £30bn, imports £20bn, investment £40bn, exports £20bn, find equilibrium government spending.

    • £40bn
    • £30bn
    • £60bn
    • £50bn

  10. If nominal GDP grows by 5% and the GDP deflator increases by 2%, what is real GDP growth?

    • 2.5%
    • 10%
    • 3%
    • 7%

  11. If total leakages exceed total injections in an economy, what happens to national output?

    • It contracts
    • It remains unchanged
    • It expands
    • It hyperinflates

  12. An economy has a GDP of £500bn and net primary income from abroad of -£20bn. Calculate GNI.

    • £500bn
    • £460bn
    • £480bn
    • £520bn

  13. A consumer buys a foreign-made car in the UK. How does this transaction directly affect UK leakages?

    • Leakages decrease
    • Leakages increase
    • Injections decrease
    • Injections increase

  14. When calculating GDP via the expenditure approach, which component is subtracted from total spending?

    • Government spending
    • Investment
    • Imports
    • Exports

  15. If gross investment is £60bn and depreciation is £15bn, what is the net addition to capital stock?

    • £30bn
    • £45bn
    • £75bn
    • £60bn

  16. Which of the following transactions is excluded from GDP calculation to avoid double counting?

    • Export sales
    • Transfer payments
    • Capital investment
    • Public sector wages

  17. Why might GNI per capita be a better measure of standard of living than total GDP?

    • Includes shadow economy
    • Excludes price inflation
    • Adjusts for population
    • Excludes foreign trade

  18. Which activity is an example of an informal economic transaction omitted from official GDP statistics?

    • Unregistered cash work
    • Commercial bank lending
    • Dividend distributions
    • State benefit payments

  19. What primary adjustment converts national income at market prices to national income at factor cost?

    • Deduct net taxes
    • Add foreign remittances
    • Add capital depreciation
    • Deduct export subsidies

  20. In a closed economy without government, what MUST total national output equal according to circular flow identity?

    • Total tax revenue
    • Total expenditure
    • Total net exports
    • Total private savings

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