If injections are greater than withdrawals, Y will increase. As Y increases, S, T & M will also increase, as households will save more, pay more tax and buy more goods from abroad. If withdrawals are greater than injections, Y will fall.
What would happen to the economy if injections are greater than leakages?
This is a 2-sector, open economy. The flow will be balanced and therefore in equilibrium when the injections are equal to the leakages. If the leakages are greater than the injections then national income will fall, while if injections are greater than leakages national income will rise.
When withdrawals exceed injections total output will?
c. real GDP will not tend to change. If withdrawals exceed injections, then total output exceeds total spending then we can expect Real GDP to fall. If total injections in an economy exceed total output (withdrawal), then we can expect level of national income (GDP) to rise.
What is spare capacity in the economy?
Spare capacity occurs when a business is not making full use of its available capacity – there are spare factors of production including land, labour and capital. When an economy has plenty of spare capacity, short run aggregate supply (SRAS) is elastic, and the output gap is negative.
Is tax an injection or withdrawal?
An example of a tax collected by the government as a leakage is income tax and an injection into the economy can be when the government redistributes this income in the form of welfare payments, that is a form of government spending back into the economy.
What are net withdrawals?
Net Withdrawals means at any time during the period of this Agreement the difference between the total amount of withdrawals having been made up to such time and the total amount of repayments having been made up to such time.
What happens when there are injections and withdrawals in an economy?
In an economy where there are injections and withdrawals, the level of national income (Y) will be in equilibrium (no tendency to rise or fall) provided that: If injections are greater than withdrawals, Y will increase. As Y increases, S, T & M will also increase, as households will save more, pay more tax and buy more goods from abroad.
How is the level of injections and withdrawals determined?
In an economy where there are injections and withdrawals, the level of national income (Y) will be in equilibrium (no tendency to rise or fall) provided that: Total Injections (I + G + X) = Total Withdrawals (S + T + M) If injections are greater than withdrawals, Y will increase.
How does poverty alleviation affect the Poverty Profile?
However, poverty alleviation projects have had little impact on the poverty profile of the country. Poverty continues to be pervasive, intractable, and inexcusable. The purpose of this study was to gain insight into the personal definition of poverty as constructed by the poor themselves. In this study the researcher’s main argument was that
Are there any poverty alleviation projects in South Africa?
Many poverty alleviation programmes have been established in South Africa in an effort to overcome poverty. However, poverty alleviation projects have had little impact on the poverty profile of the country. Poverty continues to be pervasive, intractable, and inexcusable.
