Correct option is A
The Correct Answer is: (a) Injection
Explanation:
In the circular flow of income model, an injection is any addition to the economy’s circular flow that increases income and output. Exports to foreigners represent an injection,
In the circular flow of income model, an injection is any addition to the economy’s circular flow that increases income and output. Exports to foreigners represent an injection,
because they bring money into the domestic economy from the foreign sector. This is in contrast to leakages, which are withdrawals from the circular flow (like savings, taxes, and imports).
Hence, exports increase the national income and are rightly categorized as an injection in the economic flow.
Information Booster:
• Injections include investment, government spending, and exports.
• Injections increase aggregate demand and boost national income.
• The equilibrium in the circular flow is achieved when total injections = total leakages.
• Exports result in foreign income inflow, stimulating domestic production and employment.
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