Countries with high levels of wealth tend to produce high levels of income.Income is the amount of money earned during a period-‐ it is a flow concept. Wealth is the sum of all assets in an economy-‐ it is a stock concept. Income and Wealth What is the likely correlation between income and wealth? If withdrawals are greater than injections, there will be negative economic growth.If injections are greater than withdrawals, there will be economic growth.If all the injections equal leakages, the economy is in equilibrium.Exports-‐ spending by foreigners on goods and services made in the UKīalance between Injections and Withdrawals.Government Spending-‐ spending by central or local government.Therefore, an increase in investment results in a rise in spending in the economy as well as an increase in the productive capacity of the economy. Investment-‐ spending by firms on capital stock (productive resources such as factories) means more money flows to households in the form of wages, which increases spending and so on. ![]() Injections into the circular flow is consumption which does not come from households.
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