Leakages from the income-expenditure stream are:
A) Consumption, saving, and transfer payments
B) Saving, taxes, and investment
C) Saving, taxes, and imports
D) Imports, taxes, and transfer payments

Question

Quizplus · Accepted Answer

Leakages from the income-expenditure stream refer to the amount of income that is not spent on domestic output. These leakages can either be saved, taxed, or used to purchase imports. Option C includes all three of these leakages - saving, taxes, and imports. Options A and B are incorrect because consumption and investment are not considered leakages but rather components of aggregate demand. Option D includes transfer payments, which are not considered leakages but rather government spending.

Leakages from the Income-Expenditure Stream Are