2.4.2 Injections And Withdrawals

Question 1

What are injections

Answer 1

Money entering the circular flow of goods

Question 2

What are withdrawals

Answer 2

Money leaving the circular flow of goods

Question 3

Give three examples of injections

Answer 3

Government spending
Investment
Exports

Question 4

Give three examples of withdrawals

Answer 4

Taxes
Savings
Imports

Question 5

Explain how an increase in the rate of VAT affects the circular flow

Answer 5

Increased tax, increased withdrawals, decreases circular flow

Question 6

Explain how tax breaks given to new start-up businesses affect the circular flow

Answer 6

Increased profits due to decreased tax, increased investment, increased investments, increased circular flow

Question 7

Explain how the pound strengthening against the Euro affects circular flow

Answer 7

Imports cheaper, exports more expensive, increased imports and decreased exports, increased withdrawals and decreased injections, decreased circular flow of

Question 8

Explain how a cut in interest rates affects circular flow

Answer 8

Less rewards for saving and lower cost of borrowing, decreased saving and increased investment, decreased withdrawals and increased injections, increase in circular flow of income

Question 9

Explain how workers becoming nervous about keeping their jobs affects circular flow

Answer 9

Increased saving, increased withdrawals, decreases circular flow