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Consumers
Goods and Services
Producers
Consumers
Producers
(Figure 1)
Consumers
Producers
Savings (S)
Financial Sector
Consumers
Producers
Savings (S)
Financial Sector
If Savings is larger than Investment the leakage will contract the economy
S>I
If Investment is larger than Savings then the economy will expand (There is an injection of extra funds)
S<I
Government
Income (Y)
Producers
Taxation
Government Sector
Producers
Government Sector
Income (Y)
Producers
Savings (S)
Taxation (T)
Government Sector
(Figure 3)
Income (Y)
Consumers
Consumption spending (C)
Producers
Imports (M)
Overseas Sector (O/S)
Income (Y)
Consumers
Consumption spending (C)
Producers
Imports (M)
Overseas Sector
Exports (X)
Income (Y)
Consumers
Consumption spending (C)
Producers
Savings (S)
Investment (I)
Taxation (T)
Government Sector
Spending (G)
Imports (M)
Overseas Sector
Exports (X)
(Figure 4)