The Circular Flow Of Income 3 / 17

The circular flow of income

Firms pay workers -so people get INCOME

Firms make goods and people SPEND on those goods

This is the CIRCULAR FLOW of income / expenditure

The circular flow of income

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)

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