circular flow of income

in the circular flow model, if households decide to increase savings, ceteris paribus, the immediate effect will be :

a fall in consumption

injections in the circular flow include

exports, investment, and government spending

if withdrawals exceed injections economy, this implies

The economy will contract

When foreign investors increase capital inflows into Indonesia, this represents

An injection through investment

If government raises income tax, the likely is

Higher withdrawals, reducing equilibrium income

which best explains equilibrium in the circular flow?

Total injections = total withdrawals

Assume households in Indonesia save more but firms do not increase investment. The long term impact is

Leakage from the circular flow causing a slowdown

If investment in Indonesia rises by Rp 10 trillion and the MPC is 0.8, the final increase in national income is

Rp 50 trillion

In an open economy like Indonesia, which of the following represents a leakage?

Private Investment

If the government increases subsidies to poor households, the circular flow effect will be

Increased consumption and higher income

Which is not assumption of simple circular flow model

No government or foreign sector

The circular flow model demonstrates

Interdependence between households and firms

if MPS increases, the multiplier

decreases

Risee in tourism receipts from foreigners would be as

An injection

Which combinations correctly describes withdrawals

Savings, imports, taxes

When equilibrium income increases due to a rise in investment, this is known as

The multiplier effect

The value of the multiplier is larger when

MPC is high and MPS is low

If Indonesia’s government cuts spending while private investment remains unchanged, total income will

Fall because withdrawals exceed injections

Suppose MPC = 0.75 and investment increases by Rp 20 trillion. What is the change in national income

Rp. 60 trillion