Flow of income

• what is the circular flow of income

  shows how money moves from firms and households
• what are the two ways money flows

  firms pay household wages

  households pay firms with purchases
• what is true about the speed of transfer

  the faster the transactions the greater the amount of economic activity
• what are the 3 injections

  -government spending

  -investment

  -exports
• what are the 3 leakages

  -taxes

  -imports

  -savings
• how can injections and leakages be used

  by encouraging or discouraging each one you can control the speed of the economy