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Non-Competitive Markets
Question
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Explain the concept of 'leakages' and 'injections' in the circular flow of income.

Answer

A leakage means withdrawl of a part of income (money) from circular flow of income.
For instance, savings and taxes by households and firms as well as import payments are forms of leakage. Injections are addition of money to the circular flow of income, e.g., investments, government expenditure, export payments.

Sponsor Area

Some More Questions From Non-Competitive Markets Chapter

Gross Investment and Net Investment

Domestic (Economic) Territory

National Income at Current and Constant Prices (Nominal and Real NI)

Consumption of Fixed Capital (Depreciation)

Factor Cost vs. Market Price (or Net Indirect Taxes)

Net Factor Income from Abroad (NFIA)

Value of Output vs. Value Added

Factor Payment (Income) vs. Transfer Payment (Income)   

 

Sources of Domestic Income

Sectors of an Economy