Introduction to Macroeconomics

Question 1

Identify the five major sectors (or elements) of a macroeconomic free-market flow model.

Answer 1

1. Individuals
2. Business entities
3. Governmental entities
4. Financial entities
5. Foreign entities

Question 2

In a macroeconomic free-market flow model, what are “injections”?

Answer 2

Injections are the sources of amounts added to domestic production that are do not result from domestic consumption expenditures. These injections include amounts that come from government spending and subsidies, investment spending, and amounts received for exports.

Question 3

In a macroeconomic free-market flow model, what are “leakages”?

Answer 3

Leakages are the purposes for which individual income is used other than for domestic consumption expenditures. These leakages include amounts of income that go for teas, savings, and payments for imports.