Leakages from the circular flow include

Question

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Leakages from the circular flow refer to the flow of money out of the circular flow of income and spending. In this context, savings and imports are leakages because they represent money that is not being spent in the economy. Taxes can also be considered a leakage if they are not being spent by the government but rather saved or used to pay off debt. Choice A is incorrect because investment is a component of the circular flow, not a leakage. Choice C is incorrect because exports are part of the circular flow and not a leakage. Choice D is incorrect because exports are not a leakage, while imports are. Choice E is incorrect because taxes are only considered a leakage if they are being saved or used to pay off debt, and imports are the more common leakage in this context.

Leakages from the Circular Flow Include