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18. In the circular flow, what are the leakages GDP? What are the injections to GDP?

18. In the circular flow, what are the leakages GDP? What are the injections to GDP?

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Answer #1

Answer- leakage means withdrawal from the flow. When household and firms save part of their incomes it constiutes leakage. Leakage reduce the flow of income. Leakages may be in the form of tax payments, imports and savings.

Injection means introduction of income into the flow. Injection increase the flow of income. When household and firm borrow saving, they constitute injection. Injection can take in the form of investment, government spending and exports.

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