Economics Mix

Question 1

4 components of AD?

Answer 1

Consumption (C)

Government Spending (G)

Investment (I)

Net Exports (X)

Question 2

3 INJECTIONS?

Answer 2

Government Spending (G)

Net Exports (X)

Investment (I)

Question 3

3 WITHDRAWALS?

Answer 3

Savings (S)

Net Taxes (T)

Imports (M)

Question 4

What are injections?

Answer 4

Injections are additions to the economy through government spending, money from exports and investments made by firms. Injections increase the flow of income.

Investment (I). Money invested by firms in purchasing capital stock.
Exports (X). Money coming from abroad to buy domestically produced goods.
Government spending (G). Government welfare benefits, spending on infrastructure.

Question 5

What are withdrawals?

Answer 5

Withdrawals are leakages from the economy through taxes, spending on imports and savings. Withdrawals reduce the flow of income.

Savings (S) (money not used to finance consumption, e.g. saved in a bank)
Imports (M) (money sent abroad to buy foreign goods)
Taxes (T) (money collected by the government, e.g. income tax and VAT)