Question

is a leakage from circular flow of aggregate income and expenditure
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Answer 1

Answer:

In the financial sector. In terms of the circular flow of income model, the leakage that financial institutions provide in the economy is the option for households to save their money. ... This is a leakage because it is a leakage out of the current income thus reducing the expenditure on current goods and services.

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Answer 2

Answer:

In terms of the circular flow of income model, the leakage that financial institutions provide in the economy is the option for households to save their money. This is a leakage because the saved money can not be spent in the economy and thus is an idle asset that means not all output will be purchased.