If, using the Keynesian approach, total output in an economy was $5.25 trillion, total spending was $5.00 trillion, and injections into the spending stream were $3.25 trillion, leakages from the spending stream would equal:
A) $0.25 trillion.
B) $3.00 trillion.
C) $3.50 trillion.
D) $4.00 trillion.

Question

Quizplus · Accepted Answer

In the Keynesian approach, equilibrium occurs when total spending equals total output. Here, injections are additions to the spending stream, and leakages are withdrawals. To find leakages, we add the difference between total output and total spending ($5.25 trillion - $5.00 trillion = $0.25 trillion) to the injections ($3.25 trillion), resulting in $3.50 trillion in leakages. This ensures the equilibrium where total spending equals total output.

If, Using the Keynesian Approach, Total Output in an Economy