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Which best describes why taxes and savings are considered leakage factors?
They take money out of households.
They take money out of the economic system.
They take money out of the economic sectors.
They take money out of the financial sector.
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They take money out of the economic system.
In the circular-flow model taxes and savings are "leakages" because they withdraw income that would otherwise be spent on goods and services, reducing aggregate demand in the economy.
In the circular-flow model taxes and savings are "leakages" because they withdraw income that would otherwise be spent on goods and services, reducing aggregate demand in the economy.
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