InterviewSolution
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InterviewSolution
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use graphs and mathematical models to explain the relationship between leakages and withdrawals in an economy |
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Answer» Answer: Adding Up the Factors The circular flow of income for a nation is said to be balanced when WITHDRAWALS EQUAL injections. That is: The LEVEL of injections is the sum of government spending (G), exports (X), and investments (I). The level of leakage or withdrawals is the sum of TAXATION (T), imports (M), and savings (S). EXP : Leakages reduce the flow of income. Injection means introduction of income into the flow. When HOUSEHOLDS and firms borrow savings, they constitute injections. Injections increase the flow of income. |
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