The figure given below represents the leakages and injections in an economy.?Figure 10.2??In the figure:?I, I1: Investment;?G: Government spending;?EX, EX1: Exports;?T: Taxes; and?M: Imports.

-Refer to Figure 10.2. A decline in total injections, from $20 to $10:

Question

The figure given below represents the leakages and injections in an economy.?Figure 10.2??In the figure:?I, I1: Investment;?G: Government spending;?EX, EX1: Exports;?T: Taxes; and?M: Imports.
 
-Refer to Figure 10.2. A decline in total injections, from $20 to $10:

Quizplus · Accepted Answer

A decline in total injections means that the injections will decrease from $20 to $10. This will cause the equilibrium level of income to decrease from $400 to $300. This is because a decline in injections means a decrease in aggregate demand, which will shift the aggregate demand curve downward, resulting in a lower equilibrium level of income. Therefore, the correct answer is D) will cause equilibrium income to fall to $300.

The Figure Given Below Represents the Leakages and Injections in an Economy.?Figure