Taxes may be considered:
A) additions to the circular flow
B) withdrawals from the economic flow
C) injections into the economic flow
D) as not affecting the economic flow

Question

Quizplus · Accepted Answer

Taxes are considered as withdrawals from the economic flow because they decrease the amount of disposable income available for consumption or investment. This reduces the aggregate demand in the economy leading to a decrease in the national income and economic activity.

Taxes May Be Considered