Multiple choice

Which one is not a leakage in the circular flow of income?

  1. Imports

  2. Saving

  3. Taxes

  4. Government expenditure
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In the circular flow of income model, leakages (or withdrawals) are flows that reduce aggregate demand - money leaving the circulation loop. Imports, savings, and taxes are all leakages because they represent spending that is diverted away from domestic consumption. Government expenditure is an injection, not a leakage - it adds money back into the circular flow.

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