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Suppose, in a two sector model comprising consumers and firms, that the individuals receive the following...

Suppose, in a two sector model comprising consumers and firms, that the individuals receive the following payments for their provision of goods and services: wages K60000, interest K30000, rent K10000 and profits k8000. Consumption spending is K101000, planned investment expenditure is K20000 and actual investment expenditure is K7000. a) What is the equilibrium output? b) What is the level of saving in this economy; clearly show how it’s calculated. c) What is the relationship of saving and investment? d) What is a leakage from the circular flow of income? e) Why is investment spending viewed as an injection into the circular flow of income? 10 marks

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