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Question

Question
Use the drop-down menus to determine whether these examples are injectors or leakages of money in the economy. ◻ Government spending by the government sector ◻ investments made by the financial sector ◻ Taxes collected by the government sector Savings by individuals outside a bank ◻ Exports purchased by the foreign sector

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Answer

* **Government spending** by the government sector: **Injection** * **Investments** made by the financial sector: **Injection*** **Taxes** collected by the government sector: **Leakage*** **Savings** by individuals outside a bank: **Leakage*** **Exports** purchased by the foreign sector: **Injection**

Explanation

Injections represent money flowing into the circular flow of income, increasing economic activity. Leakages, on the other hand, are withdrawals of money from the circular flow, decreasing economic activity.