Grade 10 Circular Flow and Quantitative Elements

Leakages are the ways money exits the economic cycle, reducing the flow of income. Examples include savings, where money is saved rather than spent; taxes, where money is paid to the government; and imports, where money leaves the economy to purchase foreign goods. Injections are the ways money enters the economic cycle, increasing the flow of income. Examples include investment, where businesses spend on capital; government spending, where the government injects money into the economy; and exports, where money comes into the economy from selling goods abroad. Understanding these helps explain how money flows in and out of an economy.