Leakages from the circular flow include
A) savings, investment, and taxes.
B) savings, imports, and taxes.
C) exports, savings, and investment.
D) exports, investment, and imports.
E) investment, taxes, and imports.

Question

Quizplus · Accepted Answer

Savings, imports, and taxes are all leakages from the circular flow because they represent money that is leaving the economy and not being circulated through it. Savings are not being spent on goods and services, imports are being purchased from other countries instead of domestically, and taxes are being collected by the government and not being spent by consumers or businesses.

Leakages from the Circular Flow Include