The Leakage and Injections Approach Implies That Deficit Spending by the Government

question 61

Multiple Choice

The leakage and injections approach implies that deficit spending by the government must be financed by

• A)private investment less private savings plus net exports.
• B)private saving less private investment plus net exports.
• C)the trade deficit must always offset the government deficit.
• D)B and C.

---

Definitions:

Maturity

The time at which a financial instrument, such as a bond or loan, becomes due and must be repaid.

Market Efficiency

A concept describing the degree to which stock prices and other securities prices reflect all available, relevant information.

Stock Price

The cost of purchasing a share of a company in the stock market.

Adverse Information

information that negatively affects an investor's valuation of an investment and can include any bad news that impacts a company's predicted future performance or profits.