Leakages and Injections

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Leakages and Injections

Injections
The injections are everything that is completely autonomous in the economy. These are Investment, Government Expenditure and Exports. 

Leakages 

The leakages are parts of income earned that are not currently spent on goods and services. These are Imports, Net Taxes and Savings (Private Savings). At equilibrium the injections = Leakages.

I + G + X = IM + T + S \boxed{\text{I + G + X = IM + T + S }}I + G + X = IM + T + S ​

Rearranging this formula also gives us the Net Export equation: 

(X - IM) = (T - G) + (S - I) \boxed{\text{(X - IM) = (T - G) + (S - I) }}(X - IM) = (T - G) + (S - I) ​

In a closed economy with no government we could say that: 

 I = S \boxed{\text{ I = S }} I = S ​

Wize University Macroeconomics Textbook > Aggregate Expenditure

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Leakages and Injections

Injections

Leakages