2.4 - Injections and withdrawals

Question 1

Injection

Answer 1

Injections are monetary additions to the economy

Question 2

Withdrawals/leakages

Answer 2

Withdrawals or leakages are where money is removed from the economy

Question 3

Examples of injections

Answer 3

• investment
• government spending
• exports

Question 4

Examples of withdrawals/leakages

Answer 4

• taxes
• savings
• imports

Question 5

Balancing Injections and Withdrawals:

Answer 5

• When injections exceed withdrawals, there is an increase in national income, leading to economic growth.
• When withdrawals exceed injections, there is a decrease in national income, potentially leading to economic contraction.

Question 6

Impact of withdrawals/injections

Answer 6

• Economic Growth: Sustained high levels of investment, government spending, and exports lead to increased production, job creation, and higher national income.
• Recession:
  High savings rates, increased taxes, and high import levels can lead to reduced spending, lower production, and rising unemployment.