Which of the following is a leakage from the circular flow?
A)investment
B)imports
C)government purchases
D)government borrowing
E)transfer payments

Question

Quizplus · Accepted Answer

Imports are a leakage from the circular flow because they represent spending by domestic consumers, firms, or governments on goods and services produced abroad. This means that the money is leaving the domestic economy, which reduces the amount of income that can be used for consumption or investment within the domestic economy.

Which of the Following Is a Leakage from the Circular