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

12250 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is elasticity of demand and how do you work it out?


Brainstorm whether the NHS is an example of Government failure


Explain how a government can use fiscal policy to help an economy recover from a recession.


What is the impact of technological advances on a market?


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:

© 2026 by IXL Learning