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					         LEAKAGES/INJECTIONS
S + NET TAXATION + IMPORTS = ACTUAL INVESTMENT + G + EXPORTS
         LEAKAGES/INJECTIONS
S + NET TAXATION + IMPORTS = ACTUAL INVESTMENT + G + EXPORTS


LEAKAGE-----OCCURS WHEN THE EARNER
  OF INCOME USES THAT INCOME FOR
     SOMETHING OTHER THAN THE
   CONSUMPTION OF GOODS OR
   WHEN MONEY IS SPENT ON
   FOREIGN-PRODUCED GOODS.


     (EG. SAVING, PAYING TAXES, AND
       IMPORTING FOREIGN GOODS)
S + NET TAXATION + IMPORTS = ACTUAL INVESTMENT + G + EXPORTS


  INJECTION-----OCCURS WHEN
 GOODS ARE PURCHASED BY SOMETHING
 OTHER THAN DOMESTIC HOUSEHOLDS.
     (EG. INVESTMENT (PURCHASE BY
       BUSINESS), G (PURCHASE BY
         GOVERNMENT), EXPORTS
       (PURCHASE BY FOREIGNERS)
S + NET TAXATION + IMPORTS = ACTUAL INVESTMENT + G + EXPORTS



     SAVING     OCCURS WHEN
  AFTER TAX INCOME IS NOT USED
      FOR CONSUMPTION.
S + NET TAXATION + IMPORTS = ACTUAL INVESTMENT + G + EXPORTS



     NET TAXATION
Taxation (income leaving households and going to government) – Transfer
Payments (income transferred from government to households). Represents
the net amount of annual income that leaves households and goes to
government.
S + NET TAXATION + IMPORTS = ACTUAL INVESTMENT + G + EXPORTS



        IMPORTS
     Spending on foreign-produced output.
 BUS.
  $5                    $40

  BUS. INCOME

GOV.                   Profit $10
      GOV. INCOME
 $5                 DEP. COST $5
                    TAX COST $5
                    Production Cost
 LABOR $10        F
  LAND $5 FACTOR A C LABOR $10
 CAPITAL $5       C O
          INCOME T S     $30
                        LAND $5
ENTREPRENEURIAL   O T CAPITAL $5
  ABILITY $10     R
GDP - INCOME
    -
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION

         GDP = INCOME = CONSUMPTION + S + NET T




     THIS COVERS EVERY POSSIBLE
      THING THAT CAN HAPPEN TO
       INCOME IN A YEAR!!!!!!!!!!!
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION
              OF DOMESTICALLY       OF DOMESTICALLY
              PRODUCED OUTPUT       PRODUCED OUTPUT

  GDP = INCOME = CONSUMPTION + S + NET T



   HOW WAS THE INCOME EARNED
     THAT WAS NOT USED FOR
  CONSUMPTION (to bring output into
        U.S. households)?
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION
              OF DOMESTICALLY       OF DOMESTICALLY
              PRODUCED OUTPUT       PRODUCED OUTPUT

   GDP = INCOME = CONSUMPTION + S + NET T



 IT COULD ONLY HAVE BEEN EARNED
PRODUCING DOMESTIC (U.S.) OUTPUT.
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION
              OF DOMESTICALLY       OF DOMESTICALLY
              PRODUCED OUTPUT       PRODUCED OUTPUT

   GDP = INCOME = CONSUMPTION + S + NET T



   BUT IT WAS NOT USED TO BRING
            OUTPUT INTO
   U.S. HOUSEHOLDS. SO WHERE
     IS THAT OUTPUT, (THE PART
    THAT WAS PRODUCED IN THE
               U.S)?
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION
              OF DOMESTICALLY       OF DOMESTICALLY
              PRODUCED OUTPUT       PRODUCED OUTPUT

   GDP = INCOME = CONSUMPTION + S + NET T



     IT MUST EITHER BE IN U.S.
BUSINESSES (ACTUAL I), SOME LEVEL
OF GOVERNMENT IN THE U.S. (G), OR
       OVERSEAS (EXPORTS).
 ASSUME:
STANDARDIZED BOXES
  OF FINAL GOODS
 EACH PRICED AT $40
BUSINESS    HOUSEHOLDS     GOVERNMENT




                            OVERSEAS


           BOX WAREHOUSE
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION
                                    OF DOMESTICALLY
                                    PRODUCED OUTPUT




      $360            $360
    9 BOXES
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION




      $360            $360 $160 $200
    9 BOXES
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION




      $360            $360 $160 $200
    9 BOXES

       $200 = S + NET T
BUSINESS    HOUSEHOLDS     GOVERNMENT




                            OVERSEAS


           BOX WAREHOUSE
GDP = INCOME = CONSUMPTION + INCOME NOT USED FOR CONSUMPTION




      $360            $360 $160 $200
    9 BOXES

 $200 = S + NET T
 $360 = S + NET T + M (WHICH IS 160)
BUSINESS    HOUSEHOLDS     GOVERNMENT




                            OVERSEAS


           BOX WAREHOUSE
  $360 = ACTUAL I + G + EXPORTS


$360 OR   $80 OR    $80 OR    $200 OR
9 BOXES   2 BOXES   2 BOXES   5 BOXES
LEAKAGES OF $360 = INJECTIONS OF $360
BUSINESS                   HOUSEHOLDS                  GOVERNMENT




Because Saving and Net Taxation = $200, these 5
boxes did NOT go to households. They are, therefore,
available to go somewhere else.
                                                        OVERSEAS


                        BOX WAREHOUSE
     BUSINESS                   HOUSEHOLDS                  GOVERNMENT




Because these 2 boxes which were imported went to
households rather than 2 more domestically-produced boxes
going to households, these 2 domestically-produced
                                                             OVERSEAS
boxes were available to export.


                            BOX WAREHOUSE
     BUSINESS                   HOUSEHOLDS           GOVERNMENT




We’ve accounted for 2 imported boxes. Here are the
other 2.                                              OVERSEAS


                            BOX WAREHOUSE
S + NET T = $200, LEAVING 5
DOMESTICALLY-PRODUCED BOXES
AVAILABLE TO GO SOME PLACE OTHER
THAN DOMESTIC HOUSEHOLDS.
M = 160, LEAVING 2 MORE
DOMESTICALLY-PRODUCED BOXES
AVAILABLE TO GO SOME WHERE ELSE
AND MAKING 2 MORE IMPORTED
BOXES AVAILABLE FOR ACTUAL I AND
G.

				
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