The figure given below represents the leakages and injections of an economy.
Figure 10.6

-In Figure 10.6, the economy is in equilibrium at point _____.

Question

The figure given below represents the leakages and injections of an economy.
Figure 10.6
 
-In Figure 10.6, the economy is in equilibrium at point _____.

Quizplus · Accepted Answer

The economy is in equilibrium at point Q where leakages and injections are equal. At point R, injections are greater than leakages causing a surplus of funds leading to an increase in output and employment. At point N, leakages are more than injections causing a deficit in funds leading to a decrease in output and employment. At point S, leakages and injections are both zero which means there is no economic activity. At point M, injections are less than leakages causing a deficit of funds leading to a decrease in output and employment. Therefore, only point Q represents an equilibrium in the economy.

The Figure Given Below Represents the Leakages and Injections of an Economy