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 betwixt different sectors of the macro- tendernce. The British delivery comprises millions of item-by-item economic units - households, firms and government. To amazeher their decisions return spending, output and income - three shipway of measuring the total economic activity. The vizor flow of income shows flows of goods and go and factors of production between firms and households. Households provide their labour for firms who produce goods and services. In return people in scarper receive payments, such(prenominal) as wages, which in turn be fatigued 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 to a fault carry out capital investment spending (e.g. on new plant & machinery and buildings). Investment demand is an injection of notes to the circular flow of income, as it does not originate from consumers trustworthy in come. Government spending on state provide! d goods and services is injected into the circular flow and taxation will leak from it. International alternate 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 playact a leakage from the flow. (Goods and services are coming into the economy to satisfy domestic demand, but money to pay for them is period of time out of the economy). Question 2 As money moves...If you involve to get a full essay, order it on our website: OrderCustomPaper.com

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