The difference between injections and withdrawals into the circular flow of income
Injections add money into the circular flow of income. Withdrawals remove money from it. The three injections are investment, government spending, and exports. The three withdrawals are savings, taxation, and imports.
Formula
Equilibrium: I + G + X = S + T + M
Real World
When the UK government spent £37 billion on the furlough scheme in 2020, it was a major injection (G) that partially offset the massive withdrawal caused by businesses shutting down and households saving more.
Exam Focus
List all three injections and all three withdrawals explicitly; omitting any one costs marks in 'identify' or 'explain' questions.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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