Circular Flow of Income | A-Level Economics Notes

These revision notes cover everything you need to know about The Circular Flow of Income for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.

What does the circular flow of income show?

The circular flow of income shows how money circulates around the economy.

1. Firms provide goods and services, which households pay money for.
2. Households provide factors of production e.g. labour, which firms pay wages for .

What are three injections into the circular flow of income?

There are three injections in the circular flow of income:

1. exports
2. investment
3. government spending

What are three withdrawals from the circular flow of income?

There are three withdrawals out of the circular flow of income:

1. imports
2. savings
3. taxes

Summary questions

1. What does the circular flow of income show?
   1. households
   2. firms
2. What are three injections into the circular flow of income?
3. What are three withdrawals from the circular flow of income?

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