When saving leaks out of the circular flow of income and spending,
A)total income necessarily falls.
B)it leaks out of the financial system.
C)it flows to borrowers.
D)it increases the size of the spending flow.

Question

Quizplus · Accepted Answer

Savings, when not just hoarded but deposited in financial institutions or invested, become available to borrowers. These funds are then used for investment in businesses, infrastructure, or personal loans, effectively flowing back into the economy through a different channel.

When Saving Leaks Out of the Circular Flow of Income