ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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imports
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taxes
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savings
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exports
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Detailed explanation-1: -Leakages are the withdrawal of income from the flow, such as savings, taxation and imports.
Detailed explanation-2: -In economics, leakage refers to capital or income that diverges from some kind of iterative system. Leakage is usually used in relation to a particular depiction of the flow of income within a system, referred to as the circular flow of income and expenditure, in the Keynesian model of economics.
Detailed explanation-3: -For example, let’s say that an individual decides to reduce their spending now to increase the amount of savings they have in the bank. As they reduce spending and move more of their income into savings, this represents money leaving the economy to sit in a bank account. Therefore, this represents a leakage.
Detailed explanation-4: -Answer and Explanation: The Savings and the taxes are the leakages from the circular flow diagram.