Business

Question 1 Withdrawals HOUSEHOLDS Incomes Factor Goods Consumption reckon & Services Spending FIRMS Injections The posting turn tail of income and spending illustrates the linkages amidst different sectors of the macro- come throughnce. The British saving comprises millions of item-by-item economic units - households, firms and government. To amazeher their decisions rejoin spending, output and income - three shipway of measuring the total economic activity. The bank bill flow of income shows flows of goods and go and factors of production between fir ms and households. Households provide their labour for firms who produce goods and services. In return people in work receive payments, such(prenominal) as wages, which in turn are washed-out 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 alike carry out capital investment spending (e.g. on new plant & machinery and buildings). Investment demand is an injection of cash to the circular flow of income, as it does not originate from consumers menstruum incom e. Government spending on state provided g! oods and services is injected into the circular flow and taxation will leak from it. International miscellany 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 play a leakage from the flow. (Goods and services are coming into the economy to satisfy domestic demand, but money to pay for them is flowing out of the economy). Question 2 As money moves...If you wish to get a full essay, order it on our website: OrderCustomPaper.com

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