PRC-3 · Chapter 13 · Question 32 of 50
In the standard circular flow of income model, which of the following is definitively NOT classified as a 'leakage' or 'withdrawal'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Government spending on new hospitals
Explanation
Government spending is an 'injection' that introduces fresh money into the circular flow, whereas savings, taxes, and imports are 'leakages' that drain money out.
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