Which of the following is an example of a leakage from the circular flow of income and expenditure?

Question

Quizplus · Accepted Answer

Leakages refer to the withdrawals of money from the circular flow of income and expenditure. Imports represent a leakage since they involve payments to foreign producers, and the money flows out of the domestic economy. The other options listed are injections since they add to the circular flow of income and expenditure. Investment and government purchases add to aggregate demand while exports and transfer payments represent income received from abroad or the government, respectively.

Which of the Following Is an Example of a Leakage