Which of the Following Is an Example of a Leakage

question 123

Multiple Choice

Which of the following is an example of a leakage into the circular flow of income and expenditure?

• A)Saving
• B)Exports
• C)Government expenditure on goods
• D)Transfer payments
• E)Investment by firms

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Definitions:

Inflation

The velocity at which the general cost of goods and services surges, thereby diminishing the purchasing capacity.

Output

The amount of something produced by a person, machine, or industry.

Unemployment

Unemployment refers to the situation in which individuals who are capable of working and willing to work at prevailing wage rates cannot find employment.

Sacrifice Ratio

An economic term that quantifies the effect of decreasing inflation on an economy, typically measured as the percentage loss in output per one percentage point decrease in inflation.