OUTFLOWS & INFLOWS of the CIRCULAR FLOWIn our economic system, you may have exerience! the !ecrease & increase of money su"y in the economy#There are times $hen there are times $hen there is "enty of money & sometimes, a"most scarce or fe$#These %in!s of henomena are &rou'ht a&out &y the chan'es in the outf"o$s an! inf"o$sin the economic system#In the circu"ar f"o$, the househo"! receives income from the firm#From our revious !iscussion, it is assume! that the incomes receive! &y the househo"!s are a"" sent forconsumtion & 'oo!s & services are a"" so"! out#(o$ever, not a"" incomes are sent#There are factors that affect the in!ivi!ua" consumer not to uti"i)e his income#These factors are*SA+IN,S -The in!ivi!ua" consumer ten!s to save for future use#Usua""y, he !eosits his savin's in the &an%#Savin's is an income not sent for consumtion#TA./S-it is a comu"sory contri&ution to suort the 'ovt#Taxayer, as 'oo! citi)ens, has the resonsi&i"ity to contri&ute a fair share to the cost of the 'ovt#0eo"e ay their taxes in accor!ance $ith the &enefits they receive from the 'ovt#It is "i%e &uyin' 'oo!s & services in the mar%et#I10ORTST(/S/ are 'oo!s &ou'ht &y the 0hi"iines from other other countries#The country resorts to imortation if our a'ricu"ture & in!ustries cannot su"y the necessary 'oo!s that the consumers nee!#O&vious"y, no country can &e com"ete"y se"f-sufficient#As '"eane! uon, ortions of the consumers income are use! for savin's, to ay taxes, & &uy imorte! items#Savin's, taxes, & imorts of 'oo!s & services are outf"o$s in the economy#Anoutf"o$is a f"o$ of income that 'oes out of the circu"ar f"o$#IN+/ST1/NTIt constitutes a sen!in' !ecision that resu"ts in the use of outut & ro!uctive resources#Savin's !eosit ma!e &y !eositors is investe! into &usiness &y the &an%#This may &e in the form of &usiness or "en!in' the money to eo"e $ho $i"" "i%e$ise invest the money# ,O+/RN1/NT /.0/N2ITUR/SThe 'ovt co""ects taxes to !efray exenses or its infrastracture ro3ects & other economic !evt ro3ects#/.0ORTS0ro!uctsurchase!&ythe countryfromothercountriesare recirocate!&yforei'ncountries &y&uyin'ourro!ucts# Whenthe 0hi"s#exort'oo!stoother countries,aymentsarema!e& this'oes&ac%intothecircu"ar f"o$# investments, 'overnments exen!itures, & exorts are inf"o$s in our economy# An inf"o$ is a f"o$ of income that &rin's &ac% fun!s into the circu"ar f"o$When outf"o$ e4ua" the inf"o$s, the e4ui"i&rium "eve" of economic f"o$ is maintaine!#(o$ever, too much outf"o$s of money in our economy $i"" resu"t to!ef"ation# In "i%e manner, too much inf"o$s of money into our economy usua""y resu"ts toinf"ation,a !ec"inein the va"ue of money, $ith an u$ar! movement of the rice "eve"#When the amount of money in circu"ation increases, eo"e have more money to sen!#There $i"" &e an increase in !eman!#Therefore, consumers comete for avai"a&"e 'oo!s#They ay more esos for the 'oo!s they $ant & conse4uent"y, an increase in rice#Inf"ation then can &e !escri&e! as too much esos 'oin' after a sma"" num&er of 'oo!s#In our econ system, outf"o$s & inf"o$s $i"" never &e e4ua"#There $i"" a"$ays &e im&a"ance &et$een the t$o, & the im&a"ance can &e chec%e! &y the economic o"icies of the 'overnment#The reasons for these im&a"ances are--- the consumer5s &ehavior an! income#