The image presents a multiple-choice question about the circular flow model in economics. The question asks:"This is considered a leakage in the circular flow model:"The answer options provided are:- government spending- consumption expenditures- exports- taxesIn the circular flow model, leakages refer to outflows from the economy's income stream, reducing the money available for domestic consumption and investment. Taxes are often classified as a leakage, as they withdraw money from households and businesses, diverting it away from immediate economic circulation.

In circular flow model, households sell labor and capital services to firms and firms sell goods and services to households.Leakage is a part of income which is not spent on goods and services in the economy. It includes savings, taxes and imports. Injection is part of income which is spent on goods and services in the economy. It includes investment spending, government spending and exports. Correct - taxes

Answered: This is considered a leakage in the…

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This is considered a leakage in the circular flow model: government spending consumption expenditures exports taxes

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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