2.4.2 Injections and Withdrawals

• What happens when saving income is removed from the circular flow?

  It is a withdrawal of income
• What is an injection into the economy?

  Investing money into the economy
• What are taxes considered in the circular flow of income?

  A withdrawal of income
• What is government spending classified as in the circular flow?

  An injection into the economy
• How are exports classified in the circular flow of income?

  An injection into the economy

  
• What happens to the economy when imports occur?

  Money leaves the economy
• When does the economy reach a state of equilibrium?

  When withdrawals equal injections
• What is the distinction between income and wealth?

  Income is a flow; wealth is a stock
• What are examples of income?

  Wages, welfare payments, profits, dividends
• What constitutes wealth?

  Stock of assets like savings and property
• What is an injection into the circular flow of income?

  Money entering the economy

  
• What is a withdrawal from the circular flow of income?

  Money leaving the economy

  
• What happens if there are net injections into the economy?

  Expansion of national output occurs
• What occurs if there are net withdrawals from the economy?

  Contraction of production occurs