Question

Which statement is true? Savings are a leakage in the circular flow of income. Households pay wages to businesses. Exports are leakages in the circular flow of income. Taxes paid to the government have no direct effect on the economy.

Answer 1

The statement that is true is this: SAVINGS ARE A LEAKAGE IN THE CIRCULAR FLOW OF INCOME. This is because the exist of saving out of the economy results in a gap in the supply and demand. Leakages usually occurs through savings and imports.

Answer 2

The true statement is : ( A ) Savings are a leakage in the circular flow of income

Cause of leakage in the circular flow of income

The holding of funds in savings deposit creates a gap in the circular flow of income in the economy, this gap can be categorized as leakages in the flow of income in the economy. While the payment of wages to businesses by households and exports cannot be considered as leakages in the flow as income.

Hence we can conclude that The true statement is : ( A ) Savings are a leakage in the circular flow of income.

Learn more about circular flow of income : https://brainly.com/question/14043044

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