Leakages and Injections, The five sector circular flow model

Question 1

Outline what is the Five Sector Circular Flow Model.

Answer 1

The five sector circular flow model includes consumers, producers, leakages, injections, financial sector, government and the overseas sector.

Question 2

Compare Leakages and Injections.

Answer 2

Leakages is money that leaves the economy such as savings, taxes and imports whereas Injections is money that enters the economy such as government spending, investments and exports.

Question 3

Define what is the Financial sector.

Answer 3

The financial sector manages savings and provides loans. This includes the banks, share market and credit union.

Question 4

Define what is the Government sector.

Answer 4

The government sector includes all federal, state and local parts of the government. This sector collects taxes and uses that revenue to spend on public goods and services. i.e. education, infrastructure and healthcare.

Question 5

Define what is the overseas sector.

Answer 5

The overseas sector are the interactions between Australia and the rest of the world where imports and exports can be made.

Question 6

Compare imports and exports.

Answer 6

Imports are where countries purchases overseas goods and services although exports are when countries sells goods ad services overseas.