Identify the example which is not considered as Leakage in circular flow of Income and also affecting the balance of payment of an economy. |
Import of visible items. Export of invisible items. Taxes on foreign direct investment Foreign companies sending their corporate savings |
Export of invisible items. |
The correct answer is option (2) : Export of invisible items. Leakages are referred to as the non consumption uses of the income and examples of leakage are savings, taxes and imports.
Export of invisible items: This includes services exported to other countries, such as software services, tourism earnings, etc. It is an injection as it brings in foreign exchange earnings.
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