Economic Awareness - Sectors of Indian Economy
Which of the following statements about the circular flow of income is correct?
Which of the following statements about the circular flow of income is correct?
medium Q6 of 15
Step-by-Step Solution
Step 1: Understand leakages and injections
Leakages reduce income flow; injections add to it.Step 2: Evaluate each statement
Investment and government spending are injections, not leakages. Exports are injections, not leakages. Savings reduce income flow, so statement Savings reduce the flow of income in the economy is correct. Injections equal leakages only in equilibrium, not always.Final Answer:
Savings reduce the flow of income in the economy → Option BQuick Check:
Savings effect on income flow = Reduce flow (Leakage) ✅
Quick Trick: Remember injections add, leakages reduce income flow.
Common Mistakes:
MISTAKES- Confusing injections as leakages and vice versa.
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