Asked by Diana Gasparyan on May 17, 2024
Verified
Which of the following is an example of a leakage from the circular flow of income and expenditure?
A) Investment
B) Imports
C) Government purchases
D) Exports
E) Transfer payments
Leakage
Any diversion of income from the domestic spending stream; includes saving, taxes, and imports.
Circular Flow
A model in economics that describes the movement of resources, goods and services, and money among different sectors in an economy.
- Differentiate between injections and leakages in the circular flow model and their impacts on GDP.
Verified Answer
VN
Vikash NayakMay 17, 2024
Final Answer :
B
Explanation :
Imports represent a leakage from the circular flow of income and expenditure because they represent spending on goods and services that did not originate from within the domestic economy, leading to a portion of the total spending leaking out of the domestic economy.
Learning Objectives
- Differentiate between injections and leakages in the circular flow model and their impacts on GDP.
Related questions
Which of the Following Correctly Illustrates the Leakages-Injections Approach to ...
Which of the Following Is an Example of an Injection ...
Which of the Following Is True of Leakages and Injections ...
Which of the Following Statements Is True Regarding Leakages and ...
Which of the Following Is an Example of a Leakage ...