Write down your understanding and interpretation for each of the following equations, then make sure that you familiarize yourself with these formulas: Leakages = Injections in Equilibrium (i.e. SP + (T – TR) + M = I + G + X)
What will be an ideal response?
Ans: Leakages = income earned but not spent in the domestic economy in a given year. (SP,T-TR,M).
Injections = spending from sources other than households in a given year (I, G, X).
Total spending= Total income iff Leakages=Injections (SP + (T – TR) + M = I + G + X).
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