ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Money flowing into the economic system
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Money flowing out of the economic system
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Savings, Taxes and Imports
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Income generated in unofficial markets
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Detailed explanation-1: -Answer: It refers to the withdrawal of money from the circular flow of income. When households and firms save a part of their income, it leads to a leakage from the circular flow of income. Define injections.
Detailed explanation-2: -Injection means the introduction of income into the flow. When households and firms borrow savings, they constitute injections. Injections increase the flow of income. Injections can take the forms of investment, government spending and exports.
Detailed explanation-3: -Injections are the introduction of income into the flow, such as additions to investment, government expenditure and exports. • Leakages are the withdrawal of income from the flow, such as savings, taxation and imports.
Detailed explanation-4: -Land receives rent, human capital receives a wage, real capital receives a rate of return, and enterprise receives a profit. Members of households pay for goods and services they consume with the income they receive from selling their factor in the relevant market.
Detailed explanation-5: -An economy will grow if the value of injections is greater than the value of withdrawals, or shrink if the value of withdrawals is greater than injections.