ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Payroll
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Purchasing Equipment
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They never do
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Taxes
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Detailed explanation-1: -The examples of withdrawal (which is a variable that leaks out from the circular flow of income) are taxes, imports and savings.
Detailed explanation-2: -Taxes (T) imposed by the government reduce the flow of income. Money paid to foreign companies for imports (M) also constitutes a leakage. Savings (S) by businesses that otherwise would have been put to use are a decrease in the circular flow of an economy’s income.
Detailed explanation-3: -Taxes are a leakage or withdrawal from the flow of income and spending in the economy.
Detailed explanation-4: -In a three-sector circular flow diagram, government is a buyer (demand) in both the product and resource markets. Government provides public goods, public services, and transfer payments to households and firms in exchange for tax payments.