ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Injections can take the forms of investment, government spending and exports. As long as leakages are equal to injections, the circular flow of income continues indefinitely.

Detailed explanation-2: -In the circular flow model, injections into the economy include investment, government purchases, and exports while leakages include savings, taxes, and imports.

Detailed explanation-3: -Government spending is an injection because money is added to the economy which can be used by households to acquire more goods and services. Businesses use the money to expand their operations by purchasing more factors of production.

Detailed explanation-4: -Government taxation is not an injection into the circular flow of national income. Injection means introduction of investment, government expenditure and exports. Whereas leakages comprise of taxes, savings and imports.

Detailed explanation-5: -There are four sectors and three markets in the circular flow of income model. The four sectors are the household sector, the firm sector, the government sector and the foreign sector. The three markets are the goods market, the factor market and the financial market respectively.