Consider the circular flow of income in an open economy. Which of the following combinations correctly represents the leakages from the income stream?

💡 Solution & Explanation

In macroeconomic circular flow models, leakages or withdrawals are portions of income that are not passed along to domestic consumption, consisting of savings, taxes, and imports. Conversely, injections into the economy include investment, government expenditure, and exports. Mixing leakages with injections or factor payments leads to accounting errors in national income determination. Net exports and domestic savings rates are critical indicators tracked during national economic planning.