What are Injections?

THese are the additions to the circular flow of income.

Injections Include:

• Investment (I)
• Government Expenditure (G)
• Exports (E)

$ \therefore J = I + G + X $
Where $J \rightarrow Injections$

Investment (I)

• Investments are the purchase of capital goods i.e. goods used to produce other goods such as machinery and equipment.
• Also, investment involve borrowing funds from financial institutions for expansion.
• Thus, investment is an injection into the circular flow of income.

Government Expenditure (G)

• Government spends on the economy and adds to the circular flow of income.
• Firms can receive grants and subsidies from the government.
• Some households may be employed by the government and so earn an income.
• Thus, government expenditure is an injection into the circular flow of income.

Exports (X)

• Firms in an economy can sell some of its output to foreigners.
• Earnings from the sale of domestic output abroad is recorded as exports, for example, the export of oil and gas from T&T.

$\therefore$ Exports are an injection into the circular flow of income.

What are Withdrawals or Leakages?

• This refers to any income received by the economic agents, which is NOT returned to the circular flow of income.
• In other words, withdrawals/leakages are income that is NOT passed on into the circular flow of income.
  

Withdrawals Include:

1. Savings (S)
2. Taxation (T)
3. Imports (M)

Savings (S)

• This consists of all the income that is NOT spent.

$\therefore$ Savings is a leakage/withdrawal in the circular flow of income.

Taxations (T)

• This consists of compulsory payments to the government based on income earned or expenditure.

$Disposable \space Income \space / \space Take-home \space pay = Total \space Personal \space Income - TAXES$

• Thus, taxation is a leakage from the circular flow of income.

Imports (M)

• These are expenditure on foreign goods and services.
• Thus, imports are a leakage in the circular flow of income.