In the textbook, there are two circular flow diagrams: One that represents the flows in the macro-economy as a closed system and one that represents the flows as an open system. Review the diagrams...

Defines and explains a closed system and provides an example. 
Defines and explains an open system and provides an example. 
Explains the inner and outer flows of a closed system. 
Explains the inner and outer flows of an open system. 
Defines and explains leakages in an open system. 
Defines and explains injections in an open system. 
Provides a personal example of a leakage, describes it and explains it. 
Provides a personal example of an injection, describes it and explains it. 
Please submit your assignment.
The essay looks at the basics of the functioning of an economy in terms of interactions between different economic agents. These interactions are defined in terms of flows within the economy in terms of money or physical goods and services produced in an economy. Money allows an easier understanding of these flows as it converts everything into a common denomination- money itself. The simplest system uses 2 types of economic agents- producers and hhds, that have no interaction with the world beyond their own system. This world is called Rest of the World-ROW. This closed system can be extended to include government as the third agent. The next part differentiates a close from an open system that includes ROW. In each system, the possible leakage and injections are explained. Lastly, personal examples are provided as an illustration of the leakages and injections in the system.
The circular flow of income implies that income/money/goods and services flow between different economic agents in an economy. This flow can take the form of exchange of goods and services (as in a barter economy) or in terms of money. The two forms are equivalent as money is treated as a medium of exchange only. It is useful to use money as it converts all goods and services is a common unit.
THE CLOSED SYSTEM:
It looks at the goods and services exchanged within the domestic economy only-there are no interaction with the foreign economy. This domestic economy consists of two types of economic agents—households and firms. The former provide their services in terms of labour, capital and land in return for the final goods and services that firms produce. The households provides their own service as labour, the land owned by them and the savings which take the form of capital to firms. All these are inputs into the production process that firms use to produce final goods. This is the inner circle of the flow diagram, where no money is involved and this flow can be based purely on exchange
arter basis.
To convert this into a monetary flow we introduce money. In return for the labo
other services, households are paid compensation that takes the form of wages (for labour), rent (for land) and rental (for capital). These constitute the factor incomes...