A leakage is
A)An export from the economy.
B)A decline in the capacity of the economy to produce goods.
C)A diversion of income from spending on domestic output.
D)A decrease in aggregate supply.

Question

Quizplus · Accepted Answer

A leakage occurs when some of the income in an economy is diverted away from consumption and into savings, taxes, or imports. This means that there is less money available for spending on domestic output, and can lead to a decrease in aggregate demand. Choices A, B, and D do not accurately describe a leakage.

A Leakage Is