Income received by firms that is not returned to households or other firms is called________________?
Correct answer: B. withdrawals
- A. savings
- B. withdrawals
- C. unbalanced exchange
- D. exchange flow
Explanation
Withdrawals are income leakages from the circular flow because the money is saved or otherwise not returned to firms through current spending. Savings are one type of withdrawal, so the broader term is withdrawals.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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