Business

Question 1 Withdrawals HOUSEHOLDS Incomes Factor Goods Consumption operate & Services Spending FIRMS Injections The posting turn tail of income and spending illustrates the linkages amongst different sectors of the macro- rearnce. The British scrimping comprises millions of item-by-item frugal units - households, firms and government. To amazeher their decisions go spending, output and income - three shipway of measuring the total economic activity. The note flow of income shows flows of goods and go and factors of production between firms and househo lds. Households provide their labour for firms who produce goods and services. In return people in do work receive payments, such(prenominal) as wages, which in turn argon fagged 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 anyhow carry out capital investment spending (e.g. on new plant & machinery and buildings). Investment demand is an injection of currency to the circular flow of income, as it does not originate from consumers period income. Govern ment spending on state provided goods and se! rvices is injected into the circular flow and taxation will leak from it. International modify 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 toy a leakage from the flow. (Goods and services are coming into the economy to satisfy domestic demand, but money to pay for them is full point out of the economy). Question 2 As money moves...If you expect to get a full essay, order it on our website: OrderCustomPaper.com

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