Macroequillbrium, leakages, injections 1 (J) done Flashcards
macroeconomics
the branch of economics concerned with large-scale or general economic factors
AD =
C + I + G + (X-M)
C:
consumption
I:
investment
G:
government
X:
exports
M:
imports
Y:
Income
total output=
total income = total expenditure
4 resources
land (rent)
labour (wages)
capital (interest)
enterprise (profit)
Y=
C + I + Gs
Leakages=
savings + taxation + imports
Injections=
investment + government + exports
If leakages are more than injections, income
falls
If leakages are less than injections, income
rises
Equilibrium is achieved when
total leakages = total injections
S + T + M = I + Gs + X
Leakages definition
income withdrawn from direct flow between households and firms
Injections definition
money received by Australian producers that has not come directly from Australian households
Economy will be in a downturn / reccesion when
total leakages exceed total injections, aggregate income and expenditure will fall
Economy will be in an upswing when
total leakages are less than total injections , aggregate income and expenditure will rise