Edexcel A Level Economics B
Edexcel A Level Economics B 2.5 National Income Exam Questions
Free Edexcel A Level Economics B exam questions on 2.5 National Income, with mark schemes. Covers the circular flow, injections, withdrawals and the multiplier.
2.5 National Income exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
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A Level Economics Flashcards
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Pick your exam board, then test yourself with the questions on this page.
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About Edexcel A Level Economics B 2.5 National Income
This part of 2.5 explains how national income is determined. Expect multiplier calculations and questions on injections and withdrawals.
What you need to know
- Circular flow of income Income flows between households and firms, with injections and withdrawals.
- Injections Investment, government spending and exports.
- Withdrawals Saving, taxation and imports.
- The multiplier Multiplier = 1 / (1 - MPC) or 1 / MPW. An injection raises national income by more than the initial amount.
Common mistakes in 2.5 National Income
- Treating saving as an injection.
- Using 1 / MPC for the multiplier.
- Ignoring imports and tax when estimating the multiplier.
Try three 2.5 National Income exam-style questions
1. The MPC is 0.75. Calculate the multiplier. (2 marks)
Show the mark scheme answer
1 / (1 - 0.75) (1) = 4 (1).
2. State the three injections into the circular flow. (3 marks)
Show the mark scheme answer
Investment (1), government spending (1), exports (1).
3. Explain why the multiplier means an injection has a larger final effect on national income. (2 marks)
Show the mark scheme answer
Spending by one person becomes income for another (1), who then spends part of it, so income rises in successive rounds (1).
2.5 National Income FAQs
What does 2.5 National Income cover?
The circular flow, injections, withdrawals, equilibrium national income and the multiplier.
What reduces the size of the multiplier?
Higher marginal propensities to save, pay tax and import.
Is income the same as wealth?
No. Income is a flow, wealth is a stock of assets.
Revise this topic with flashcards: A Level Economics Flashcards, with mark scheme answers for Anki and Quizlet.
