Distinguish Between Withdrawals And Injection Expenditure In The Economy By The Government. What Happens When Withdrawals Are Bigger Or Smaller Than Injections?

Question

Distinguish Between Withdrawals And Injection Expenditure In The Economy By The Government. What Happens When Withdrawals Are Bigger Or Smaller Than Injections?

2 Answers

Answer Question

Answer 1

Well withdrawals are items or services that are taken out of the economy and do not contribute to it for example imports whereas injections are items or activities that bring money or growth in the economy for example exports. When withdrawals are bigger then injections this could lead to negative economic growth and budget deficit. Furthermore if they are less then injections then the country would be facing a budget surplus and increased economic growth. Hope this answers the question.

Answer 2

Withdrawals take money out of the system whereas injections create more goods and services thereby if withdrawals are bigger that injections It is a contractionary measure to remove money from the economy. In doing so it is a measure to curb spending and curb inflation.