Leakages and Injections Leakages: A leakage is any "income recieved within the circular folw that does not flow directly back". (1) An example of a leakage would be savings because savings is the portion of income that is not flowing directly back into the circular flow model.
Injections: An injection is "any spending flow that is not dependant on the current level of income". (2) An example of and injection would be investment spending.
Endnotes:
(1) John E. Sayre, Allan J. Morris, Principles of MacroEconomics, 6th Edition, (McGraw-Hill Ryerson, 2009), Page 92.
(2) John E. Sayre, Allan J. Morris, Principles of MacroEconomics, 6th Edition, (McGraw-Hill Ryerson, 2009), Page 93.
other leakages include
taxes
import spending
Other injections include
government spending
export spending
If economy is steady: Y = C + I + G + (X - Im)
Leakages = Injections S + T + Im = I + G + X
Net export = X - Im
REFERENCE:
Dr. Stephanie Powers, "Circular Flow"(Lecture, Donald School of Business, Red Deer AB, Winter 2012)
Leakages: A leakage is any "income recieved within the circular folw that does not flow directly back". (1) An example of a leakage would be savings because savings is the portion of income that is not flowing directly back into the circular flow model.
Injections: An injection is "any spending flow that is not dependant on the current level of income". (2) An example of and injection would be investment spending.
Endnotes:
(1) John E. Sayre, Allan J. Morris, Principles of MacroEconomics, 6th Edition, (McGraw-Hill Ryerson, 2009), Page 92.
(2) John E. Sayre, Allan J. Morris, Principles of MacroEconomics, 6th Edition, (McGraw-Hill Ryerson, 2009), Page 93.
other leakages include
Other injections include
If economy is steady:
Y = C + I + G + (X - Im)
Leakages = Injections
S + T + Im = I + G + X
Net export = X - Im
REFERENCE:
Dr. Stephanie Powers, "Circular Flow"(Lecture, Donald School of Business, Red Deer AB, Winter 2012)