2.4.2 - Injections and Withdrawals

Question 1

What are injections into the circular flow

Answer 1

• investment spending on new capital goods
•’exports of goods and services
• government spending on public services

Question 2

What are withdrawals into the circular flow

Answer 2

• savings
• imports of goods and services
• taxation

Question 3

How do injections and withdrawals affect national income

Answer 3

• if injections are greater than withdrawals the level of national income will rise
• if withdrawals are greater than injections the level of national income will contract