<P> The leakage that the Government sector provides is through the collection of revenue through Taxes (T) that is provided by households and firms to the government . This is a leakage because it is a leakage out of the current income thus reducing the expenditure on current goods and services . The injection provided by the government sector is Government spending (G) that provides collective services and welfare payments to the community . An example of a tax collected by the government as a leakage is income tax and an injection into the economy can be when the government redistributes this income in the form of welfare payments, that is a form of government spending back into the economy . </P> <Dl> <Dt> In the overseas sector </Dt> </Dl> <Dt> In the overseas sector </Dt> <P> The main leakage from this sector are imports (M), which represent spending by residents into the rest of the world . The main injection provided by this sector is the exports of goods and services which generate income for the exporters from overseas residents . An example of the use of the overseas sector is Australia exporting wool to China, China pays the exporter of the wool (the farmer) therefore more money enters the economy thus making it an injection . Another example is China processing the wool into items such as coats and Australia importing the product by paying the Chinese exporter; since the money paying for the coat leaves the economy it is a leakage . </P>

In the circular flow of​ income net taxes are a leakage and household saving is an injection