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Subjects · Leaving Cert Economics

Leaving Cert Economics: Circular flow & multiplier

How often Circular flow & multiplier comes up on the Economics papers, every year it was asked, and questions to try.

HL Asked on 5 of the last 5 Higher Level papers, most recently in 2025. banker

OL Asked on 4 of the last 5 Ordinary Level papers, most recently in 2025. most years

Circular flow & multiplier, Higher Level(7 marks)

Quick ones on Circular flow & multiplier.

(a)In the circular flow of income, which is an injection?
  1. Savings
  2. Exports
  3. Taxation
(b)The three leakages from the circular flow of an open economy are…
  1. Consumption, wages and profits
  2. Investment, government spending and exports
  3. Savings, taxation and imports
(c)A closed economy with no government has an MPC of 0.8. What is the multiplier?
  1. 5
  2. 0.2
  3. 1.25
Show the answers

(a) Exports

(b) Savings, taxation and imports

(c) 5

Your turn: Higher Level questions on Circular flow & multiplier.

Higher Level

Asked on 5 of the last 5 Higher Level papers, most recently in 2025. banker

Every paper, year by year

YearWhere it came up
2025Q2, Q12
2024Q11
2023Q13
2022Q2, Q4
2021Q15

Links open the State Examinations Commission’s paper for that year.

More Circular flow & multiplier questions

Circular flow & multiplier, 2 marks

In the circular flow, household savings reach firms mainly through…

  1. The government sector, as taxes paid to the State
  2. The foreign sector, as spending on imports
  3. The financial sector, as loans for investment
Show the answer

The financial sector, as loans for investment

Savings are a leakage, but banks lend them on to firms that invest, which is an injection. If investment equals savings, income is unaffected.

Circular flow & multiplier, 3 marks

National income is in equilibrium when…

  1. Household savings fall to zero and all income is spent
  2. Planned injections equal planned leakages
  3. Exports are exactly equal to imports
Show the answer

Planned injections equal planned leakages

If injections (I + G + X) exceed leakages (S + T + M), income rises; if they are smaller, it falls. Income settles where the two are equal.

Circular flow & multiplier, 3 marks

Investment rises by €120m and national income rises by €300m in total. What is the multiplier?

  1. 2.5
  2. 0.4
  3. 180
Show the answer

2.5

Multiplier = change in national income ÷ change in injection = 300 ÷ 120 = 2.5. Its inverse, 0.4, is the marginal propensity to withdraw, not the multiplier.

Ordinary Level

Asked on 4 of the last 5 Ordinary Level papers, most recently in 2025. most years

Every paper, year by year

YearWhere it came up
2025Q12
2024Not asked
2023Q13
2022Q13
2021Q6

Links open the State Examinations Commission’s paper for that year.

More Circular flow & multiplier questions

Circular flow & multiplier, 2 marks

Which is a leakage from the circular flow of income?

  1. Investment
  2. Government spending
  3. Taxation
Show the answer

Taxation

Taxes are paid to the government instead of being spent by households on goods from Irish firms, so they leave the flow. Investment and government spending are injections.

Circular flow & multiplier, 3 marks

The MPS is 0.2 and the MPM is 0.3. The multiplier is?

  1. 0.5
  2. 2
  3. 5
Show the answer

2

Multiplier = 1 ÷ (MPS + MPM) = 1 ÷ (0.2 + 0.3) = 1 ÷ 0.5 = 2. Each €1 of new injection raises national income by €2.

Circular flow & multiplier, 3 marks

The multiplier is 2 and the government spends an extra €50m. National income rises by?

  1. €100m
  2. €50m
  3. €25m
Show the answer

€100m

Change in national income = multiplier × injection = 2 × €50m = €100m. The first spending becomes someone's income, and part of it is spent again.

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