Which of the following are examples of leakages?
A) government purchases,net taxes and imports
B) government purchases,exports and investment spending
C) net taxes,household saving and imports
D) net taxes,investment spending and exports
E) net exports,investment spending and net taxes

Question

Quizplus · Accepted Answer

Leakages are the outflows from the circular flow of income and refer to the non-consumption uses of disposable income. Net taxes reduce disposable income, which means that they represent a leakage. Household saving also represents a leakage because it is a portion of disposable income that is not consumed. Imports also represent a leakage because they represent spending on goods that are not produced domestically. Therefore, option C (net taxes, household saving, and imports) are the examples of leakages.

Which of the Following Are Examples of Leakages