Injections and Withdrawals Flashcards
1
Q
What is an injection?
A
Injections add money to the circular flow of income, which can lead to economic growth
2
Q
Give 3 injections
A
- Government spending
- Investment
- Exports
3
Q
What is a withdrawal?
A
those elements in the macro economy that leave the circular flow of income
4
Q
Give 3 withdrawals
A
- taxing
- savings
- imports
5
Q
What happens when injections are bigger than withdrawals (net injections)?
A
the amount of money in the circular flow increases, resulting in economic growth
6
Q
What happens when withdrawals are bigger than injections (net withdrawals)?
A
the amount of money in the circular flow decreases, resulting in a fall in real GDP
7
Q
What happens when withdrawals = injections?
A
If all the injections equal leakages, the economy is in equilibrium
