Open & Closed Systems

Circular flow of income System Saving

Open and Closed Systems
Kathryn Naggie
AIU Online Macroeconomics
February 19, 2012

In this paper, I will define and explain a closed system and provide an example. I will define
and explain an open system and provide an example for it. I will also be explaining the inner and outer flows for both the closed and the open systems. I will then define and explain the leakages in an open system and define and explain the injections in an open system. Lastly, I will provide a personal example of a leakage and describe and explain it. I will also provide a personal example of an injection and describe and explain it to.

A closed system is an economic model that counts only domestic exchanges, but not foreign agents. A closed system is also a system that moves from the household to the business. There are also a flow of payments from businesses to homes. They also have very little, if any interaction at all with other systems or with the outside environment. The closed system method visualizes the organization as a way of management, technology, personnel, equipment, and materials but does not include competitors, suppliers, distributors, and governmental regulations. The closed system method allows supervisors and organizational planners to break down problems by looking at the inner shell of a business with very little thought to the outside environment. The viewpoint of the closed system looks at an organization much like a thermostat; restricted environmental input outside of changes in temperature is needed for efficient...
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