The Leakage and Injections Approach Implies That a Government Deficit

question 75

Multiple Choice

The leakage and injections approach implies that a government deficit is financed by

• A)private saving less private investment plus net exports.
• B)private investment less private saving plus net exports.
• C)the trade deficit must always offset the government deficit.
• D)None of the above.

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Definitions:

National Debt

The total amount of money that a country's government has borrowed, usually as a result of spending more than it receives in taxes.

Vertical Equity

A principle in taxation stating that taxpayers with a higher ability to pay should contribute more in taxes than those with a lesser ability to pay.

Flow Measure

A quantitative assessment that represents movement of items over time, often used in economics to track variables like income.

Consumption

The consumption of products and services by individuals in a household.