Economics (AS)·National Income determination · NSSCAS 4.3
Circular flow, injections, withdrawals & the multiplier
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This is the model that ties the whole macroeconomy together. We draw the circular flow of income between households and firms, then open the economy so money can leak out (withdrawals) and be added in (injections). We find the equilibrium level of national income where injections equal withdrawals, work out the average and marginal propensities to consume and save, and meet the powerful idea of the multiplier — with a real Namibian government-infrastructure example worked step by step.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Economics (AS) 4.3):
- Describe and analyse the theory of income determination in closed and open economies
- Define injections and withdrawals and marginal and average propensities
- Analyse the effects of changes in injections and withdrawals including the multiplier
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Miss Hilma and Mike talk through the whole topic — with the figure and working drawn live.