Answer to Question #308286 in Macroeconomics for nickey

Question

 

    

i.                   Draw the circular flow diagram                                                             

ii.                 List all the injections and withdrawals                                                       

iii.               Explain how withdrawals and injections may impact an economy.                                                                                                                          

 

    

.   

Answer 1

a)Injections

This involves the introduction of new income into the economy. They include investments, government spending and as well as the exports. They are meant to increase the cashflow of income in the economy

b)Withdrawals

These are leakages from the flow. These leakages include savings, taxes and as well as imports. They are meant to reduce the cashflow of income in the economy.