Business

Question 1 Withdrawals HOUSEHOLDS Incomes Factor Goods Consumption go & Services Spending FIRMS Injections The posting turn tail of income and spending illustrates the linkages mingled with different sectors of the macro- leave alonence. The British preservation comprises millions of item-by-item frugal units - households, firms and government. To amazeher their decisions gift spending, output and income - three shipway of measuring the total economic activity. The poster 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 puddle 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 besides carry out capital investment spending (e.g. on new plant & machinery and buildings). Investment demand is an injection of bills to the circular flow of income, as it does not originate from consumers menstruation income. Government spending on state provided goods ! and services is injected into the circular flow and taxation will leak from it. International variegate 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 stand for 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 neediness to get a full essay, order it on our website: OrderCustomPaper.com

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