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How do injections and withdrawals affect the size of the circular flows of income and expenditure in an economy?
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Distinguish between withdrawals and injection expenditure in the economy by the Government?
withdrawals and injections are both a part of the circular flow of income. Injections are things that are providing finance or services into the economy for example exports. Withdrawals on the other hand are the things that are being taken out of the economy such as imports. If withdrawals are bigger then injections the country would be facing a deficit and negative economic growth. If withdrawals are less then injections then a country would be facing a budget surplus and economic growth.
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
What happens if withdrawals exceed injections?
When withdrawals exeed injections, AD is too low. The paradox of thrift suggests that if households increase their savings, they may not be saving at all due to the following downward multiplier, which reduces their national income, usually in a two sector economy
With reference to the circular flow model of the economy explain what happens to economic growth unemployment and inflation when injections exceed withdrawals or leakages?
When injection exceeds leakage aggregate demand will high it followed by high employment , with rise in price economic growth will ensures . For detail explanation you can take from Tutorpace
What are the examples of both injection and withdrawal leakage in the national economy?
The Examples of Injections are-Investment-Government Expenditure-ExportsThe Examples of Leakage are-Saving-Taxes-imports
Distinguish between withdrawals and injection expenditure in the economy by the Government?
withdrawals and injections are both a part of the circular flow of income. Injections are things that are providing finance or services into the economy for example exports. Withdrawals on the other hand are the things that are being taken out of the economy such as imports. If withdrawals are bigger then injections the country would be facing a deficit and negative economic growth. If withdrawals are less then injections then a country would be facing a budget surplus and economic growth.
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
What happens if withdrawals exceed injections?
When withdrawals exeed injections, AD is too low. The paradox of thrift suggests that if households increase their savings, they may not be saving at all due to the following downward multiplier, which reduces their national income, usually in a two sector economy
With reference to the circular flow model of the economy explain what happens to economic growth unemployment and inflation when injections exceed withdrawals or leakages?
When injection exceeds leakage aggregate demand will high it followed by high employment , with rise in price economic growth will ensures . For detail explanation you can take from Tutorpace
What are the examples of both injection and withdrawal leakage in the national economy?
The Examples of Injections are-Investment-Government Expenditure-ExportsThe Examples of Leakage are-Saving-Taxes-imports
What is IS curve?
It is the locus of combinations of the interest rate and the level of real national income for which desired aggregate expenditure equals actual national income.So called because, in a closed economy with no government, it also reflects the combinations of the interest rate and national income for which investment equals saving, I=S. In general, it reflects points for which injections equal withdrawals.
What is an IS curve?
It is the locus of combinations of the interest rate and the level of real national income for which desired aggregate expenditure equals actual national income.So called because, in a closed economy with no government, it also reflects the combinations of the interest rate and national income for which investment equals saving, I=S. In general, it reflects points for which injections equal withdrawals.
Explain the effect of financial crisis taken place in the west using circular flows of income?
The balance of the circular flow of income is disrupted by the crisis. In short, withdrawals have increased and injections have decreased. 1) Because of the huge national and international debt within our economy, the government raises taxation and decreases government expenditure. The households have lower income and the firms aren't being funded anymore by the government. Thus people have less money to spend and firms aren't able to expand. 2) Because of the instability of the economy and the dip in confidence, households tend to save their money instead of spend it. Additionally, financial institutions only invest when they expect the value to rise - which is not the case today and so investment goes down. 3) Because of the fall in expenditure and investment, the firms have to cut their cost and they do so by decreasing wages and firing their workers. The households have therefore less money to spend and so they consume less products which results into the firms having lower profit. In a crisis, the circular flow of income becomes a vicious circle. The fall in injections decreases aggregate demand which leads to the fall in aggregate supply. The economy thus shrinks.
The circular flow model of a mixed economy shows .?
what does a circular model of a mixed economy show
With reference to the circular flow model of the economy explain what happens to economic growth unemployment and inflation when injections exceed withdrawals?
im not too sure if im correct but injections exceeding withdrawals mean inflation increases as theres TOO MANY PEOPLE AND MONEY CHASING TOO FEW GOODS....this means that producers will increase the price of the good so that they will be able to bring demand to an equilibrium point... because inflation has increased the monetary committee will increase interest rates thus causing unemployment to increase as producers will not be able to pay wages ......... or something like that ONCE AGAIN IM NOT COMPLETELY SURE IF IM RITE
What is national expenditure?
It is the total expenditure for all kinds within the economy that is public and private. The national expenditure =Consumption+Investment+government purchases.
How does the circular flow model of a mixed economy compare with that of a market economy?
Government is added into the circular flow model of a mixed economy.
