2.4.2 Injections and Withdrawls

• Injection into the circular flow of income


  Money which enters the economy
• Forms of injections

  • Government spending
  • Investment
  • Exports
• Withdrawal from the circular flow of income

  Money which leaves the economy
• Forms of withdrawals


  • Taxes
  • Saving
  • Imports
• Equilibrium


  The state where the rate of withdrawals = the rate of injections
• Savings in an economy

  Equal to the amount of investment
• UK savings rate


  • Traditionally low, especially during periods of high economic growth
  • Means the rate of investment is also low
• Japan savings rate


  • High
  • With this comes a high level of investment
• Net injections into the economy

  Expansion of national output
• Net withdrawals from the economy

  Contraction of production, so output decreases