Macro - Injecions & Withdrawals

Question 1

Explain the impact of injections into the circular flow of income

Answer 1

Money entering the economy. When injections are greater than withdrawals the amount of money in the circular flow increases, resulting in economic growth.
The 3 types of injections
- Government Spending
- Investment
- Exports

Question 2

Explain the impact of injections of withdrawals from the circular flow of income

Answer 2

This is money leaving the economy. When withdrawals are greater then injections the amount of money in the circular flow decreases results in a fall in real GDP.
The 3 types of withdrawals.
- Savings
- Taxation
- Imports