Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 10, Problem 2MCQ
To determine
The question requires us to determine the leaks out factor in the expanded circular-flow model.
Expert Solution & Answer
Explanation of Solution
The circular-flow diagram represents the flow of money and the transactions of goods and services between firms and households. These transactions happen in the market for goods and services and factor markets.
In a circular-flow diagram, the flow of money into the market is equal to the flow of money out of the market. Private savings represents the outflow of money from the market. Thus, it is considered a leak-out in an economy.
Option “c” is correct.
Chapter 10 Solutions
Krugman's Economics For The Ap® Course
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