What Do You Know About Circular Flow Of Income?

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What Do You Know About Circular Flow Of Income?

As the name implies, the circular flow of income is a chart like structure which represents the income of a household, a city, or even a whole country. As its name implies, it looks like a circle. Let's test your knowledge on this subject by subjecting you to a few questions about it!


Questions and Answers
  • 1. 
    The flows of money and services run in….
    • A. 

      The same direction

    • B. 

      Different directions

    • C. 

       Parallel directions

    • D. 

      Different directions but end up meeting

  • 2. 
    How many models of a circular flow income chart exist?
    • A. 

      Three

    • B. 

      One

    • C. 

      Four

    • D. 

      Five

  • 3. 
    What is the name of the last model?
    • A. 

      Five sector model

    • B. 

      Two sector model

    • C. 

      One sector model

    • D. 

      Three sector model

  • 4. 
    What is a leakage in a circular flow of income chart?
    • A. 

      When money gets into the chart

    • B. 

      When money from the chart is invested

    • C. 

      When money from the chart is spent recklessly

    • D. 

      When money leaves the chart

  • 5. 
    What constitute leakages?
    • A. 

      Savings and Investments

    • B. 

      Borrowing money

    • C. 

      Lending money

    • D. 

      Not doing anything at all with the money

  • 6. 
    What is an injection in a circular flow of income chart?
    • A. 

      When a household loses money

    • B. 

      When money gets into the chart

    • C. 

      When money is used for expenditure

    • D. 

      When money from the chart is invested

  • 7. 
    How many sectors exist in the circular flow of income chart?
    • A. 

      One

    • B. 

      Three

    • C. 

      Five

    • D. 

      Four

  • 8. 
    What constitute injections?
    • A. 

      Investments

    • B. 

      Savings

    • C. 

      Borrowing of money

    • D. 

      Lending money

  • 9. 
    All of these except one are part of the circular flow of income chart.
    • A. 

      Household sector

    • B. 

      Overseas sector

    • C. 

      Government sector

    • D. 

      International sector

  • 10. 
    When is a state of equilibrium reached?
    • A. 

      When the leakages surpass the injections

    • B. 

      When injections surpass the leakages

    • C. 

      When the leakages and injections are same

    • D. 

      When there are no leakages nor injections