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Study the Circular Flow Model below and answer the questions that follow.
a. Match the following items with the appropriate money flow shown in the
above circular flow model by writing the standard notion only
1 Income Tax
2 Sale of Wood by New Zealand to China
3 Consumer purchases weekly groceries
4 Unemployment benefits
5 Paying money into a superannuation
scheme by income earners in NZ.
6 Paying for a new public hospital
. (3 marks)
(1 mark)
(1 mark)
Many economies are concerned that the economic recovery from the
recent recession is fragile and given numerous recent adverse
international events and low business and consumer confidence, a
‘double–dip’ downturn in the business cycles of many economies is
still possible.
a. In diagram 1:
i. Which flow can be used to calculate GDP using the Income method?
(1 mark)
ii. Is the flow that you identified in (a) a real flow or money flow?
(0.5 mark)
iii. Which flow will be directly affected by a fall in consumer confidence?
Explain your answer.
(1 mark)
(1 mark)
Revision 2 for Final Exams July August October 2019 Intakes Page 2
ECONOMICS
FINAL EXAMINATION NOVEMBER 2015
AFY – 2015 JANUARY & APRIL INTAKES
Incomes
Firms Households
Consumption
2 Inj 3W
1 Inj Financial
4W
Government
Overseas
3W _________________ 4 W ___________________
(2 marks)
2. What will happen to the economy, and why, if the withdrawals from the
flow of income and spending are greater than the injections into the
flow.
(2 marks)
Revision 2 for Final Exams July August October 2019 Intakes Page 3
NZCETA 2018 ECONOMICS LEVEL 2 (EXAM 2.3)
In the six months to December 31, company figures showed import volumes
rose 21 per cent.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120
47564
Model One: Circular flow model for the New Zealand economy
(a) Using Model One above, fully explain the impact on economic growth
of an increase in import volumes.
Revision 2 for Final Exams July August October 2019 Intakes Page 4
The Government and Auckland Council will embark on New Zealand’s largest
ever civil construction programme to create a 21st century transport network,
Minister of Transport Phil Twyford and Auckland Mayor Phil Goff said today.
http://www.scoop.co.nz/stories/PA1804/S00273/record-investment-to-get-auckland-moving.htm
Model Two: Circular flow model for the New Zealand economy
Transfer Payments A
(b) (i) Using Model Two above, identify Flow A and fully explain the impact
on economic growth of an increase in investment in Auckland’s
transport network.
Revision 2 for Final Exams July August October 2019 Intakes Page 5
(ii) Fully explain whether the increase in import volumes or the
investment into Auckland’s transport network will have a greater impact
on New Zealand’s economic growth.
(c) Compare and contrast the effect of the investment into Auckland’s
transport network on Auckland’s regional GDP and national GDP.
Revision 2 for Final Exams July August October 2019 Intakes Page 6