Question

4. The circular flow of income and spending reveals that an increase in South African exports will…
[1] increase spending on South African imports by more than the spending on exports.
[2] increase income to South African economy and increase income to South African producers
of goods and services.
[3] increase income to foreign firms and increase income to foreign factors of production.
[4] decrease output and income in the rest of the world.

Answer 1

[2] increase income to South African economy and increase income to South African producers of goods and services.