Flow of Income and Spending

Questions :

1- A fall in business confidence among UK manufacturing firms. A fall in expectation of investors will make them tend to withdrawl capitals >> It's the leakage in the circular flow and also contract the the ouput of country.

2- The pound rises by over 5% against the US dollar in the global currency markets. The rise in exchange rates will increase the price of exports >> It's the injaction into the flow and extent the national income.

3- The government announces an above-inflation pay rise for nurses in the NHS. In this situation, this is the spending of government to encourage people to take off welfare, and to take a job instead. It's the injection to the flow of income and also extent the National Income

4- Nissan decides to reduce investment spending at their main Sunderland plant and shift some car production to the Czech Republic. The withdrawl of Investment is the leakage in the circular of Income and Spending >> A Contraction of National Income

5-The government announces a fall in the rate of taxation applied to the interest paid on savings in bank accounts. This announcement will decrease the money from saving of consumer in order to spending or invest. It's the injection into the flow and the extent in National Income.

6- The UK reduces the size of an import tariff imposed on imports of Chinese clothing and footwear. A decrease in tax for import will make the price of import cheaper, and the consunption of import will increase. It's the injection to the flow of income and spending to China whereas the leakage to the flow in UK.

7-The annual rate of economic growth in the United States increases following a fall in US interest rates. It is the injection from government to boost into the flow of Income and Psending >> The extention in US National Income

8- The government decides to increase the UK road-building programme by £600m . The increase in government expenditure is one factor that inject into the flow >> causes an extention in National Income

9 -The Bank of England‘s Monetary Policy Committee decides to cut interest rates from 5% to 4% . With the reduction in IR, consumer tend to save less and spend more >> an injection into the flow of Income and spending, and also the extent in National Income