According to Tucker (2012, p.404), a circular flow of income model shows the flow of money, resources and products between businesses and households. One half of the figure shows product markets and the other factor markets. In product markets, the firms sell their goods and services to households in exchange for money and in factor markets, the businesses demand resources, capital, labour, and other factors needed to manufacture their goods and services. In the product markets, the demand and supply models determine the prices and quantities of goods in exchange. In the factor market, the same models determine the returns to the demanded factors. Thus goods and service flow in one direction and the related payments flow in the other in the figure of circular flow (Tucker, 2012, p.405).
When the Australian government purchases US military aircraft, it is a net withdrawal. The government, in general, raises funds, for its expenditure (military and all others) from the economy, in the form of taxes, tariffs, etc. So to purchase the military aircraft and strengthen defense, the Australian government would have collected taxes from the Australian households, but will not have given anything in exchange. The Australian businesses have not obtained any injection, but it is the US aircraft business, that has an inflow of income in this case. So this is a net withdrawal.
When the government’s expenditure is increased, it can be assumed that it is in favour to the Australian households. The government has in turn, funded this expenditure through tax revenues and borrowings from the general public. So it is neither a withdrawal nor an injection.
When the government’s expenditure is increased, it is in favour to the Australian households. The government has in turn, funded this expenditure through tax revenues and printing more money. The government has printed money to do something in favour of the Australian households. The households are benefited without any payment. So it is a net injection.