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:

Code-Law Countries

Nations that base their legal systems on a comprehensive, written set of laws, as opposed to case law or common law systems.

Common-Law Countries

Nations that follow a legal system inherited from English law, where the emphasis is on case law and judicial precedent rather than statutory laws.

Investment Companies

Firms that invest the funds of their clients into securities that match declared financial objectives.

Code-Law Country

A country where the legal system is based on a comprehensive, codified set of laws, as opposed to common law systems.