Which of the following best describes the role of injector factors in an economic system?

• A. They introduce external inputs such as investment, government spending, and exports that add to the flow of income in the economy.
• B. They set the prices of goods and services in competitive markets.
• C. They determine the allocation of resources based solely on consumer preferences.
• D. They remove income from the economy through mechanisms like taxes, savings, and imports.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of 'injector factors' in the context of an economic circular flow model. Injector factors are elements that add income or spending into the economy, increasing the overall economic activity.
2. Step 2: Identify examples of injector factors, such as investment spending by firms, government expenditures on goods and services, and exports which bring money into the domestic economy from abroad.
3. Step 3: Contrast injector factors with 'leakages' or 'withdrawals,' which are mechanisms that remove income from the economy, like taxes, savings, and imports.
4. Step 4: Recognize that injector factors increase the flow of income and spending, thereby stimulating economic growth and production.
5. Step 5: Conclude that the correct description of injector factors is that they introduce external inputs such as investment, government spending, and exports that add to the flow of income in the economy.