Answer to Question #270153 in Macroeconomics for Audrey

Question

Q.1.1 In the circular flow of income and spending: (2) (1) Investment results in a decrease in the volume of the income flow; (2) Savings result in a decrease in the volume of the income flow; (3) Taxes result in an increase in the volume of the income flow; (4) Imports result in an increase in the volume of the income flow.

Answer 1

Ans: (2) Savings result in a decrease in the volume of the income flow;

The circular flow of income is subject to leakage and injections, the savings result result in the leakage in the circular flow of income so it results in the decrease in the income flow.