Which is an injection into the circular flow?

• A. Borrowing
• B. Taxes
• C. Imports
• D. Exports

Answer: (A)

Injections are additions to spending in the circular flow, boosting aggregate demand, while withdrawals remove spending from the economy. Borrowing can act as an injection because it funds additional spending today. When someone borrows to buy goods or finance investment, that spending creates income for others (firms, workers, suppliers), who then spend more in turn, keeping the money circulating. Taxes and imports drain spending from domestic economy activity, while exports bring money into the domestic economy from foreigners, increasing domestic income. So, borrowing stands out as the mechanism that raises current spending and expands the flow, making it an injection.