In the following paragraphs there will be explanation of the way that the flow diagram charts works. This is for the two forms of an open system and the closed system in macro-economics. The definition and how the flow chart help keep the flow of cash in the nation and international.
There are macro-economic models in the world today. Two forms of systems to keep track of the flow of money. The first is a closed system, which basically trades the domestic’s cash flow, plus the mechanism which is used by the nation. The second method is called open system; the open system is used mostly to trade all forms of cash flow also international purchases and sales.
In the open system, taxes are included to show government purchases and inject money back in the economy. Monies that are lost due to purchase of foreign goods and services also included in the open system.
The America economy runs on an open system that sees many leakages in the government and foreign companies. Government leaks occur when taxes imposed on individuals and companies lost in income. The foreign leak happens when individuals or companies decides to buy from foreign products at a cheaper rate. Such transactions spent on products are leaks overseas and sometimes never come back. Another form of leakage is when Americans companies use outsources their labor or capitol to overseas locations. Even though the company may save, they can make additional profits, the funds which are leaked may never be seen again.
A most currently debated business who outsources their labor, the production of production of products is Apple. They are currently undergoing rigorous investigations for poor working conditions provided in overseas locations. Because of the working conditions in foreign areas the safety regulations and minimum wage were miniscule. The Americans may not ever get these jobs back because the Chinese will always underbid (Eskow, 2012).
Now what happens to all the money that leaks out of the economy go? Mostly to the other nations economies. Which some of the monies do make it back to the American economy the same as it left? When an injection takes place ths when a foreign or individual purchases American goods or services. If a forging company hires an American worker the wages are injected back...