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Questions and Answers
Which one of the following is a leakage from the domestic economy in an open economy?
Which one of the following is a leakage from the domestic economy in an open economy?
- Exports (X)
- Investment expenditure (I)
- Consumption expenditure (C)
- Imports (M) (correct)
Which one of the following is an injection into the domestic economy in an open economy?
Which one of the following is an injection into the domestic economy in an open economy?
- Exports (X) (correct)
- Imports (M)
- Consumption expenditure (C)
- Investment expenditure (I)
Which one of the following is an element of Aggregate Demand in an open economy?
Which one of the following is an element of Aggregate Demand in an open economy?
- Taxation (T)
- Savings (S)
- Expenditure on imports (M) (correct)
- Consumption expenditure (C)
Which one of the following is a leakage from the Circular Flow Model (CFM) in an open economy?
Which one of the following is a leakage from the Circular Flow Model (CFM) in an open economy?
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Which one of the following is an injection into the Circular Flow Model (CFM) in an open economy?
Which one of the following is an injection into the Circular Flow Model (CFM) in an open economy?
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Study Notes
Open Economy and Circular Flow Model (CFM)
- A leakage from the domestic economy in an open economy is Imports.
- An injection into the domestic economy in an open economy is Exports.
- An element of Aggregate Demand in an open economy is Net Exports (X - M).
- A leakage from the Circular Flow Model (CFM) in an open economy is Savings (S), Taxes (T), and Imports (M).
- An injection into the Circular Flow Model (CFM) in an open economy is Investment (I), Government Spending (G), and Exports (X).
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