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Injections and Withdrawals are important features in our understanding of economic activity and the business cycle
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Injections and Withdrawals are important features in our understanding of economic activity and the business cycle. Explain the relationship between them and how they influence national income. * Injections-only part of demand for firms arises through consumers, the remainder comes from other sources outside the inner flow. Investment- This is the money firms spend after obtaining it from various financial institutions, either past savings or loans or through new issue of shares. They may invest in equipment or building up stocks. Government Expenditure- When government spend money on goods and services produced by firms. This has a negative impact on national income as it reduces money available but can increase national income through expenditure and increased production. Export Expenditure- Money floes into circular flow from abroad when residents abroad buy our exports of goods and services. Positive for economic growth and increases national income. (source:economics) * Withdrawals- only part of households income spent goods and...
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