injections

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In the circular flow of income model, injections represent inflows of money from external sources that enhance aggregate demand, total spending, and national income in the economy.

  • Investment (I): Expenditures by firms on capital goods, including machinery, factories, and technology. These investments generate immediate income for producers of such goods and services while fostering potential for expanded output and future income growth.
  • Government Spending (G): Public sector outlays on goods and services, such as infrastructure development, education programs, and defense initiatives. This directly augments the overall flow of income within the economy.
  • Exports (X): Earnings from the sale of domestic goods and services to international buyers. This introduces foreign currency into the home economy, stimulating economic activity.