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- Subject
- The National Economyeconomics-mcqs › the-national-economy
- Published
- 27 May 2019
- Last updated
- 28 May 2026
Explanation
For the circular flow to maintain equilibrium, leakages must exactly match injections. If leakages differ from injections, the economy will either contract or expand.
More The National Economy MCQs
Practice related questions from the same subject.
- 1.How does leakage through imports in an open economy affect the multiplier's magnitude?
- 2.Which components determine the overall multiplier effect in an economy?
- 3.With fixed government expenditure and tax rates, during which economic phases does the government budget deficit increase and during which does it decrease?
- 4.What is the likely effect on economic output if the government raises taxes to fully cover an increase in its spending?
- 5.When households attempt to increase their savings, but equilibrium income shifts without any change in total savings, what economic concept does this illustrate?
- 6.How is the multiplier determined in economic terms?
- 7.If investment is considered autonomous, what factor primarily determines the slope of the aggregate demand (AD) curve?
- 8.In the short-run equilibrium, how does aggregate demand relate to the actual level of output?
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