• The usefulness of Robertsons budget equation in portraying the circular flow of income and spending, and the nature and logic of the various monetary injections into that flow and leakages from it, assuming a fiat money system. (15/100)
  • Explain how financial sector activities can be captured by the various injections and leakages and how this budget equation can be used to model the interaction between the financial and real sectors.
  • NB: you do not need to go into the detail of the derivation of this budget equation; just explain its underlying logic.