Household spending from transfer payments, and payments for personal income taxes are:
A) both income-determined spending.
B) both injections into the spending stream.
C) injections into, and leakages from, the spending stream, respectively.
D) income-determined spending and nonincome-determined spending, respectively.

Question

Quizplus · Accepted Answer

Transfer payments are considered injections into the economy because they are funds given to individuals (e.g., welfare, unemployment benefits) without corresponding services or goods being provided in return. Payments for personal income taxes are considered leakages from the spending stream because they are funds paid to the government that could otherwise be spent in the economy.

Household Spending from Transfer Payments, and Payments for Personal Income