Question

Which statement is true?

A.
Savings are a leakage in the circular flow of income.
B.
Households pay wages to businesses.
C.
Exports are leakages in the circular flow of income.
D.
Taxes paid to the government have no direct effect on the economy.Which statement is true?

Answer 1

The answer is A. savings are a leakage in the circular flow of income This is because the exist of saving out of the economy results in a gap in the supply and demand. Leakages usually occurs through savings and imports. Hopefully this helps!