CAIE A Level Economics - Paper 4

9.1 The circular flow of income

Topical Past-Paper Questions

CAIE A Level Economics 9708 Paper 4 topical essay questions on The circular flow of income, with marks, year filters and sample answers where available.

CAIE A Level Economics Paper 4 Topic 9.1

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About this topic

The circular flow of income questions are grouped here so you can revise the way CAIE A Level Economics Paper 4 asks extended essays.

In Paper 4 essays, this topic often asks you to:

Define the key economic terms precisely
Use diagrams where they strengthen analysis
Build chains of reasoning before evaluation
Reach a supported judgement for evaluate or discuss questions

Before you begin

1Read the command word
2Check whether the question asks discuss, assess or evaluate
3Plan the argument and counterargument
4Finish with a clear judgement

Exam material

Past-paper questions

Past-paper question 9708/41/O/N/22 [25] marks

A government's decision to increase its budget deficit as a proportion of the economy's GDP will depend significantly upon whether the economy's output gap is positive or negative.

With the help of a diagram explain and evaluate this statement. [25]

Open question

Past-paper question 9708/41/O/N/21 [12 + 13] marks

a) Explain what economists mean by the marginal propensity to consume and consider the importance of this concept in relation to government macroeconomic policy. [12]

b) Discuss what determines the level of savings in an economy and assess the impact of an increase in the level of savings upon economic growth and employment. [13]

Open question