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SingaporeEconomicsQuick questions
National Income and Macroeconomic Aims
Quick questions on Circular flow and national income accounting explained: H2 Economics
4short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the circular flow of income?Show answer
In the simplest model, households own the factors of production and supply them to firms, receiving factor incomes (wages, rent, interest, profit). Households spend this income on goods and services, which is revenue for firms. Income therefore flows round in a circle: output generates income, which finances expenditure, which pays for output.
What is q1?Show answer
State the three withdrawals from the circular flow. [2 marks]
What is q2?Show answer
Explain why the three methods of measuring GDP give the same value. [3 marks]
What is q3?Show answer
Distinguish real from nominal GDP. [2 marks]
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