Which of the following is an injection into the circular flow?

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

Answer: (A)

The idea being tested is how injections add to the economy’s spending, pushing the circular flow higher. An injection is any spending that comes from outside the immediate flow of household income and increases overall demand. Borrowing fits here because when funds are borrowed, they enable additional spending—whether on investment by firms or on consumption by households. That borrowed money is used to buy goods and services, so it adds to aggregate demand and to the income circulating in the economy now, before any repayments.

In contrast, taxes take money out of households' hands, imports spend domestic income on foreign goods, and savings divert money into banks rather than spending it. Each of these reduces the flow of spending within the domestic economy, so they’re withdrawals rather than injections.