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Economics 2.4.2
Economics- Edexcel 2.4.2
| Term | Definition |
|---|---|
| open economy injections of extra demand into the circular flow | investment spending on new capital goods/exports of goods and services/government spending on public services |
| open economy leakages of extra demand into the circular flow | savings/imports of goods and services/taxation |
| I | investment spending on new capital goods |
| X | exports of goods and services |
| G | government spending on public services |
| S | savings |
| M | imports of goods and services |
| T | taxation |
| equilibrium of circular flow of income | when injections = leakages |
| when does the level of national income rise? | if I+G+X > S+M+T |
| when does the level of national income contract? | if I+G+X < S+M+T |