Injections into the income-expenditure stream include:
a) investment and imports.
b) investment and exports.
c) transfers and imports.
d) transfers and exports.
transfers and exports
To determine which of the given options represents injections into the income-expenditure stream, we need to understand what injections are in the context of income-expenditure analysis.
Injections refer to the addition of spending or income into the circular flow of the economy, which increases the overall output (GDP). They are considered positive influences on the economy. In contrast, leakages (or withdrawals) represent the opposite, as they remove spending or income from the circular flow.
Now, let's analyze each option:
a) Investment and imports: Investment refers to spending on capital goods, such as factories or machinery, by businesses. Imports represent spending on goods and services from foreign countries. Both investment and imports are considered injections, as they add spending to the economy.
b) Investment and exports: Similarly to option a), investment is an injection, but exports represent spending by foreign countries on goods and services produced domestically. As exports are part of the circular flow of income and expenditure, they do not count as injections but rather as leakage or withdrawal.
c) Transfers and imports: Transfers, such as government welfare payments or grants, are not considered injections because they don't add to the overall spending or production in the economy. Imports, as mentioned before, count as injections.
d) Transfers and exports: Similar to option c), transfers are not injections, so this option is incorrect. Meanwhile, exports, as mentioned before, are considered a leakage or withdrawal.
Therefore, the correct answer is option a) - injections into the income-expenditure stream include investment and imports.
Injections into the income-expenditure stream refer to any addition of spending or income into an economy, which increases the total aggregate demand. In this context, the injections include investment and exports.
a) Investment: This refers to the spending by firms on capital goods, such as machinery and equipment, in order to increase production and expand their operations. Investment injections increase the overall level of economic activity and contribute to economic growth.
b) Exports: Exports refer to the goods and services produced domestically and sold to foreign countries. When a country exports goods and services, it earns income from international trade, which acts as an injection into the income-expenditure stream. Export injections increase the country's aggregate demand, leading to increased economic activity.
Therefore, the correct answer is b) investment and exports.