Which of the following statements is true?
Statement 1- Expansion of circular flow implies "Injections" in the economy.
Statement 2- Contraction of circular flow implies "Leakages" in the economy.
Answer & explanation
Correct answer: option 3
Expansion of circular flow or injection means when the level of income, production and expenditure rises.
Contraction of circular flow or leakage means when the level of income, production and expenditure falls.