Which of the following statements is true?
A) Tax payments to the government are leakages from the spending stream.
B) Government purchases of goods and services are direct injections into the spending stream.
C) Transfer payments from government to households are a source of injections into the spending stream.
D) All of the above.

Question

Quizplus · Accepted Answer

All the statements are true. Tax payments are considered leakages because they are income not available for spending on goods and services. Government purchases directly add to the spending stream by acquiring goods and services. Transfer payments, although not for goods or services, increase household income, enabling spending, thus acting as injections into the economy.

Which of the Following Statements Is True