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Leakages from the circular flow of income
 

 

A term from Keynesian economics that describes uses of income that do not give rise to a further round of incomes. Such uses include saving by individuals or firms, payment of taxes the government, and purchase of imports from foreigners. If leakages exceed injections to the circular flow, incomes will decline.

 

Reference: Oxford Press Dictonary of Economics, 5th edt.