Anonymous says:. Social Profiles. Listing Notes. Categories economist 2 forum 1 issue 1 kuiz 1 macroeconomics 28 microeconomics 32 Pesanan Cikgu 1. Popular Posts Injection and Withdrawal. Withdrawal and injection are the terms used in describing economic expenditures and related to the c Profit in Perfect Competition Market.
Short-run profit in perfect competition market In the short term, perfect competition market will have three different types of profit Types of Production. Policy to reduce BOP deficit. Policy to reduce BOP deficit 1. Monetary policy Government increase the rates of interest rate, it become costly to borrow, peopl The macroeconomic variables resulting in leakages are government consumption, government investment and exports, whereas the macroeconomic variables resulting in injections are savings, government taxes and imports.
Leakages result in a contraction in the production process or income generation and reduction in demand for goods and services. As against, Injections may result in an expansion in the production process or income generation and generation of demand for goods and services. To reach equilibrium or economic stability, the total planned leakage must tally total planned injections which amount to the same equilibrium as aggregate production and aggregate expenditure.
A balance between these two ensures a continuous flow of income, consumption, production and factor payments circulating in the different sectors. So, during the time that leakages are equal to injections, the circular flow of income continues for an indefinite period. Your email address will not be published.
Save my name, email, and website in this browser for the next time I comment. Skip to content. Difference Between Leakages and Injections Read out the points stated below, to have a clear understanding of leakages and injections:. Share and Enjoy! Types of System Calls. Liquid — A State of Matter. This is due to the fact that they can now borrow money at a lower rate of interest, thus reducing the cost of borrowing.
Therefore, firms will decide that it is best for them to invest whilst interest rates are low. This will cause investment to increase and therefore the injections into the circular flow to increase also.
In addition to this, a decrease in interest rate reduces the reward for those who save their money. This is because they will earn less interest on the money they save. Therefore, consumers will be encouraged to spend their money, keeping it in the circular flow of income. This will cause a reduction in the amount of withdrawals from the circular flow of income.
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