Business

Question 1 Withdrawals HOUSEHOLDS Incomes Factor Goods Consumption serve & Services Spending FIRMS Injections The posting turn tail of income and spending illustrates the linkages amid different sectors of the macro- caternce. The British delivery comprises millions of item-by-item frugal units - households, firms and government. To amazeher their decisions contribute spending, output and income - three shipway of measuring the total economic activity. The street arab flow of income shows flows of goods and go and factors of production between firms a nd households. Households provide their labour for firms who produce goods and services. In return people in practice receive payments, such(prenominal) as wages, which in turn ar played 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 also carry out capital investment spending (e.g. on new plant & machinery and buildings). Investment demand is an injection of silver to the circular flow of income, as it does not originate from consumers present-day(pre nominal) income. Government spending on st! ate provided goods and services is injected into the circular flow and taxation will leak from it. International compound 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 range 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 command to get a full essay, order it on our website: OrderCustomPaper.com

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