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  •  Circular flow of income, multiplier, AD & AS, opportunity cost

Click to read the article below and then answer the questions:

Nissan unveils first UK battery factory in £1bn Sunderland plan

  • Identify the injections (J) and withdrawals (W) from the circular flow of income.

  • Explain the multiplier process.

  • The article states that jobs will be created at the factory and in the wider supply chain.  Using an AD/AS diagram, analyse the local multiplier effects of Nissan’s £1bn investment in the north east economy.

  • ‘The government has given about £100mn of support to the Nissan project at Sunderland, according to people briefed on the discussions.’  Evaluate whether this is an appropriate use of taxpayers’ money.

Gavin Clarke, Emmanuel College

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