The Circular Flow of Income is a simple economic model that
describes the reciprocal circulation of income between producers and consumers.
National Output = National Income = National Expenditure
Injections: Additions to investment, government spending or
exports (i.e. money that originates outside the circular flow of income)
leading to a multiplied expansion of national income/output/expenditure.
Withdrawals: Increases in saving, taxes or imports (i.e.
money not passed on in the circular flow of income) leading to a multiplied
contraction of national income/output/expenditure.
An economy is said to be in a state of macroeconomic
equilibrium when planned withdrawals equal planned injections.
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