Which of the following represents a leakage from the circular flow of income?

Multiple choice question for Basic of Economics. Select an option, then review the explanation below.

Explanation

In the circular flow of income, withdrawals or leakages are amounts taken out of the economy. Taxes reduce the income available for spending, thus acting as a leakage. Investment and subsidies are injections, while consumption is part of the flow within the economy.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Under what condition can two nations benefit from engaging in international trade?
3.Which of the following represents a legitimate form of currency?
4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

Which of the following represents a leakage from the circular flow of income?

Explanation

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