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Flashcards in Chap 10 Deck (12)
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1
Q

leakage?

A

income not spent directly on domestic consumption but instead diverted from the circular flow
ex. saving, imports, taxes

2
Q

gross business saving?

A

depreciation allowances and retained earnings

3
Q

injection?

A

addition of spending to the circular flow of income

4
Q

what are forms of injections?

A

investment, government and export spending

5
Q

what must injections equal?

A

leakages if all the output supplied is equal to the output demanded (macro equilibrium)

6
Q

Multiplier?

A

tells us the extent to which the rate of total spending will change in response to an initial change in the flow of expenditure

7
Q

what are forms of leakages?

A

consumer saving, business saving, taxes, and imports

8
Q

why are they leakages?

A

bc they take money out of economy

9
Q

why are they injections?

A

because they add money into the economy

10
Q

when desired injections = leakages, economy is in what?

A

equilibrium

11
Q

an imbalance of injections and leakages will cause what?

A

economy to expand or contract

12
Q

what does the multiplier do>

A

indicates the cumulative change (shift) in aggregate demand that follows an initial (autonomous) disruption of spending flows