Which of the following statements is true regarding leakages and injections?
A)Government transfer payments must equal taxes because one is a leakage and the other is an injection.
B)Imports must equal exports since both are leakages.
C)Government purchases,investment,and exports are leakages from the circular flow of income and expenditure.
D)Savings and net taxes are leakages from the circular flow of income and expenditure.
E)Net taxes are an injection into the circular flow,while exports are a leakage.

Question

Quizplus · Accepted Answer

Leakages refer to any factors that remove money from the circular flow of income and expenditure, namely savings, taxes, and imports. Injections, on the other hand, are any factors that add money into the circular flow of income and expenditure, namely government purchases, investment, exports, and transfer payments. Therefore, savings and net taxes are leakages from the circular flow of income and expenditure.

Which of the Following Statements Is True Regarding Leakages and Injections