The Figure Given Below Represents the Leakages and Injections in an Economy

question 13

Multiple Choice

The figure given below represents the leakages and injections in an economy.
Figure 10.2
In the figure:
I, I1: Investment;
G: Government spending;
EX, EX1: Exports;
T: Taxes; and
M: Imports.
-Refer to Figure 10.2. A decline in total injections by $10:

• A) will cause equilibrium income to rise to $400.
• B) will result in a disequilibrium of $200 in the economy.
• C) will cause the total leakages curve to shift inward by $10.
• D) will cause equilibrium income to fall to $300.
• E) will not affect equilibrium income.

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Definitions:

Arbitration

Process of intergroup conflict resolution in which a neutral third party is invited to impose a mutually binding settlement.

Bargaining

Process of intergroup conflict resolution where representatives reach agreement through direct negotiation.

Primitive Behaviour

Actions or reactions that are considered to be based on early or basic human instincts rather than learned or civilized responses.

Le Bon

Referring to Gustave Le Bon, a French social psychologist known for his work on crowd psychology and the study of mob behavior in the late 19th and early 20th centuries.