Explain the likely effects on the circular flow of income of the change in unemployment between 2013 and 2015.

(Context - a graph is provided showing unemployment falling by around 3%).As unemployment fell by 3% between 2013 and 2015, there will be an increase in money in the circular flow of income as more people are now receiving wages. This increase in income will result in an increase in consumption as there is an increase in demand for goods and services produced by firms. This increase in economic activity may result in injections into the circular flow of income such as through overseas investment. There may however be leakages due to the fact that consumers may spend this money on imports instead.

SS
Answered by Sanjay S. Economics tutor

11732 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

How does a reduction in the interest rate affect aggregate demand in a closed economy?


Using Angola as an example, evaluate the view that MNCs play a positive role in the development of LEDCs. (25 marks)


What would be effect on the price of oil due to an increase in cars used in the UK


What is the difference between deflation and falling inflation?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning