For example, in the Keynesian depiction of the circular flow of income
and expenditure, leakages are the non-consumption uses of income, including saving, taxes, and imports.
However, while the M4 integrates South Wales with the rest of the UK economy and beyond, the Metro will ease the circular flow of income
in the region.
Of course, it's a relevant factor for most economic activity, with the circular flow of income
effectively leveraging a base supply of money, leading to aggregate levels of demand that drive output and its pricing ever higher if unchecked.
A SAM shows the circular flow of income
and expenditure in an economy, with each cell representing a payment from a column account to a recipient in a row account.
All these results are consistent with Keynesian macroeconomics, except that they now highlight the special role of credit in the circular flow of income
. The following directed graph (Fig.
This leads to some interesting, and formerly unknown to me, connections, such as Law's early discussion of a circular flow of income
model that influenced Cantillon's circular flow which in turn influenced Quesnay's tableau economique.
The circular flow of income
model provides the theoretical basis for the methodology in this paper.
The essential features of a social accounting matrix (SAM), say authors Pradhan (chief economist, National Council of Applied Economic Research, India), Saluja (India Development Foundation, India), and Singh (research analyst, National Council of Applied Economic Research, India), consist of an input-output matrix on the flow of goods and services and the structure of production costs, extended with institutional details to show the circular flow of income
at the macro-level.
Despite the dangers of overconsumption by way of debt, the tendency to consume rather than save is valued very highly by most economists, who perceive a circular flow of income
whose momentum must be sustained.
"Money from the informal sector will be channelled into the system, adding to the circular flow of income
," he said.
The material than switches from microeconomics to macroeconomics in presenting chapters on the circular flow of income
, national income, and money; aggregate demand; investment and capital accumulation; international trade and production; globalization, inequality and economic growth; national currencies and international money markets; unemployment and inflation; macroeconomic performance and stabilization; and environmental sustainability.
In this case, the endogenous increase in expenditure and imports is less than the exogenous increase in expenditure and imports, being the result of a large withdrawal from the circular flow of income
by (induced) imports.