National Income | Edexcel A-Level Economics A (9EC0)

National Income

112 questions
9 subtopics
Theme 2: the UK economy, performance and policies
Paper 2 and Paper 3

Covers how income circulates and what determines its level: the circular flow, injections and withdrawals, macroeconomic equilibrium on an AD/AS diagram, and the multiplier that amplifies any change in spending..

It covers the circular flow of income, the distinction between income and wealth, injections, withdrawals and the equilibrium condition, what counts as an injection and a withdrawal, macroeconomic equilibrium and shifts in AD and AS, the shape of AS, demand-pull inflation and stagflation, the multiplier process, marginal propensities to consume, save, tax and import and calculating the multiplier and why its size matters.

Sample questions from National Income

Answer each one closed book first, then open the answer.

The circular flow of income

What are injections in the context of the circular flow of income?

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Injections are additions to the circular flow of income that increase the total level of spending in the economy.
The distinction between income and wealth

What is the key distinction between income and wealth?

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Income is a flow measured over a period of time, while wealth is a stock measured at a single point in time.
Injections, withdrawals and the equilibrium condition

Explain the mechanism by which an excess of injections over withdrawals causes economic expansion.

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When injections exceed withdrawals, more spending enters the circular flow than leaves it, increasing total demand and causing national income to rise.
What counts as an injection and a withdrawal

Define exports in the context of the circular flow model.

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Exports represent spending by foreign consumers and firms on domestically produced goods and services.
Macroeconomic equilibrium and shifts in AD and AS

When AD shifts right and excess demand exists, what happens to the general price level?

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The price level rises.
The shape of AS, demand-pull inflation and stagflation

When the aggregate supply curve is relatively steep, what does this indicate about the economy's position relative to its productive capacity?

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It indicates the economy is operating near full capacity, with limited spare resources available.
The multiplier process

When households spend their additional income, what does this spending become for others in the economy?

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It becomes income for other households and firms.
Marginal propensities to consume, save, tax and import

Define the marginal propensity to tax (MPT).

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The proportion of additional income taken by the government in taxation.

The 9 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
The circular flow of income	Recall questions on the flow between households and firms, and on what injections and withdrawals are.	16
The distinction between income and wealth	Recall questions on income as a flow and wealth as a stock, and on how each can generate the other.	8
Injections, withdrawals and the equilibrium condition	Recall questions on what happens when injections exceed withdrawals, and on the condition for equilibrium.	12
What counts as an injection and a withdrawal	Recall questions on investment, government spending and exports against saving, taxation and imports, and on the equilibrium equation.	15
Macroeconomic equilibrium and shifts in AD and AS	Recall questions on where equilibrium lies on an AD/AS diagram and what happens to price and output when either curve shifts.	16
The shape of AS, demand-pull inflation and stagflation	Recall questions on how the steepness of AS decides whether a demand shift raises output or prices, and on what produces stagflation.	11
The multiplier process	Recall questions on the multiplier ratio, why each round of spending is smaller than the last, and which components it amplifies.	9
Marginal propensities to consume, save, tax and import	Recall questions on the definitions and formulae for MPC, MPS, MPT and MPM, and on how each affects the multiplier.	14
Calculating the multiplier and why its size matters	Recall questions on the two multiplier formulae, working the value out, and what a larger multiplier means for fiscal policy.	11

National Income is 112 of the 2,508 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.