This theory of Keynesian economics purports that when leakage causes a shortage of capital, governments might have to take steps to stimulate their economies byinjecting cashinto their systems. This injection of funds can be achieved by increasing the level of exports to foreign nations, or by bo...
Leakage : Saving (s) + Taxes (T) + Imports (M) Injection : Investment (I) + Government Expenditure (G) + Exports (X). Thus, in a four-sector economy, the condition of equilibrium of an economy is given as : C + S + T + M = C + I + G + X ...
This often happens by increasing exports or borrowing money from foreign governments and investors. In some cases, such as with the United States during the 1990s and '00s, a government depends entirely on foreign investment. For instance, imports grew from 1 percent to 6 percent of total ...