Business

Question 1 Withdrawals HOUSEHOLDS Incomes Factor Goods Consumption run & Services Spending FIRMS Injections The posting turn tail of income and spending illustrates the linkages betwixt different sectors of the macro- offer upnce. The British economy comprises millions of item-by-item sparing units - households, firms and government. To amazeher their decisions soften spending, output and income - three shipway of measuring the total economic activity. The peak flow of income shows flows of goods and go and factors of production between firms and hous eholds. Households provide their labour for firms who produce goods and services. In return people in elaborate receive payments, such(prenominal) as wages, which in turn argon spent on the output of firms.

Not all of present-day(prenominal) income is spent - both(prenominal) is saved. This presents a leakage from the circular flow. In addition to consumer spending, businesses likewise carry out capital investment spending (e.g. on new plant & machinery and buildings). Investment demand is an injection of property to the circular flow of income, as it does not originate from consumers modern income. Government spending on state provided goods ! and services is injected into the circular flow and taxation will leak from it. International careen plays an increasingly important role in shaping the work of the British economy. The value of exports sold overseas will be injected into the circular flow, whilst spending by UK consumers and businesses on imported products mean a leakage from the flow. (Goods and services are coming into the economy to satisfy domestic demand, but money to pay for them is stream out of the economy). Question 2 As money moves...If you privation to get a full essay, order it on our website: OrderCustomPaper.com

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