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# Income and the Circular Flow Model

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Where is INCOME located on the circular flow model? Explain your reasoning.

https://brainmass.com/economics/microeconomics/income-and-the-circular-flow-model-519245

#### Solution Preview

On the circular flow model, income is located at the point of where it says "wages, interest, rent, profit." The income comes from firms in the form of wages ...

#### Solution Summary

This solution explains where income is located on the circular flow model.

\$2.19

## what are the "leakages" and "injections"

1. In the circular flow model of the economy, what are the "leakages?" Define them.

2. In the circular flow model of the economy, what are the "injections?" Define them.

3. Explain why the leakages must equal the injections for the economy to be at equilibrium.

4. When looking at the circular flow model and the equilibrium condition of leakages equaling injections, what would be the effect on the economy if the following were true:

a. Investment spending = \$2 billion

b. Government spending = \$8 billion.

c. Taxes = \$3 billion.

d. Savings = negative \$2 billion

e. Imports = \$12 billion

f. Exports = \$1 billion

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