The circular flow of income：練習題

In a four-sector model of the circular flow of income, which of the following combinations consists entirely of leakages (withdrawals)?

Which of the following conditions will lead to an increase in the equilibrium level of national income in the circular flow of income?

The table shows components of the circular flow of income for an economy at different levels of national income (\( Y \)). All values are in \( \$ \) billions.

\( Y \): 1000 | 1200 | 1400
\( C \): 700 | 840 | 980
\( I \): 200 | 200 | 200
\( G \): 150 | 150 | 150
\( X - M \): -50 | -70 | -90

What is the equilibrium level of national income for this economy?

The paradox of thrift suggests that if all households in an economy simultaneously attempt to increase their marginal propensity to save, the most likely outcome is:

In a closed economy without a government sector, the marginal propensity to consume is \(0.8\). If the government introduces a balanced budget by increasing both government spending and tax revenue by \(\$100\) million, what will be the impact on the equilibrium level of national income?

Explain the relationship between the average propensity to consume (\(apc\)) and the marginal propensity to consume (\(mpc\)) as national income increases, assuming autonomous consumption is positive.

If an economy is in a state of disequilibrium where planned injections (\(J\)) exceed planned leakages (\(W\)), describe the process by which the circular flow adjusts to restore a new equilibrium.

Using the formula for the national income multiplier in a simple closed economy, explain how an increase in the marginal propensity to save (\( mps \)) affects the total change in national income resulting from a decrease in investment.

(a) Distinguish between autonomous investment and induced investment, and explain how the accelerator principle determines the level of investment in the circular flow of income.
(b) Evaluate the impact on the circular flow of income if a government increases the marginal rate of taxation \( (mrt) \) during a period of economic recession. In your answer, consider the effect on both the multiplier and the equilibrium level of national income.