Question

what is meant by withdrawal and injections in circular flow of income in an economy

Answer 1

withdrawal means to reduce the cash flow in the economy it is done when inflation is high...
by withdrawaling the money it reduces the purchasing power of people and hence inflation problem is solved...

it is done by:-

increasing interest on loans which discourages people to take loan and thus reduces the money supply.

injection is when the money needs to me circulated in the market. this situation is caused because some people has too much black money. so money supply becomes less therefore to coop up with this problem government inject money in the economy.

it can be done by:-

providing loans at low rate of interest.

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