When Saving Leaks Out of the Circular Flow of Income

question 129

Multiple Choice

When saving leaks out of the circular flow of income and spending,

• A)total income necessarily falls.
• B)it leaks out of the financial system.
• C)it flows to borrowers.
• D)it increases the size of the spending flow.

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Definitions:

Break-even

A condition where the aggregate of all financial outgoings is identical to the aggregate of all income, resulting in a neutral earnings scenario.

Monthly Unit Sales

The total quantity of products sold by a company in one month.

Selling Price

The amount for which a company offers its goods or services for sale to customers.

Advertising Budget

The total amount of money allocated for promoting products and services to potential customers.