Economic Awareness - Sectors of Indian Economy
Which of the following correctly describes a leakage in the circular flow of income model?
Which of the following correctly describes a leakage in the circular flow of income model?
medium Q14 of 15
Step-by-Step Solution
Step 1: Understand leakages
Leakages are withdrawals from the circular flow that reduce the flow of income.Step 2: Analyze options
Household savings reduce consumption spending, thus are leakages. Government spending and investment are injections. Exports bring money in, so not leakages.Final Answer:
Household savings in banks → Option AQuick Check:
Leakage in circular flow = Household savings ✅
Quick Trick: Leakages = Savings, Taxes, Imports.
Common Mistakes:
MISTAKES- Confusing government spending or investment as leakages.
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