CIMA BA1 Syllabus A. Macroeconomic And Institutional Context Of Business - The Circular Flow Of Income - Notes ^{3 / 17}

Firms pay workers -so people get INCOME

Firms make goods and people SPEND on those goods

This is the CIRCULAR FLOW of income / expenditure

INJECTIONS increase the Circular Flow

These are:

1. Exports (More money coming from abroad) (X)

2. Government Spending (helps firms and people spend more) (G)

3. Investments (I)

WITHDRAWALS decrease the Circular Flow

These are:

1. Imports (Money leaving for abroad) (M)

2. Savings (money not being spent) (S)

3. Tax (Money not being spent) (T)