Question

An increase in savings by consumers is seen as a(n):_________.

a. decrease in investment spending in the economy increase in government spending in the economy.
b. decrease in exports in the economy.
c. increase in imports in the economy.
d. leakage in spending in the economy.

Answer 1

D. Leakage in spending in the economy.

Step-by-step explanation:

It is observed that if consumers have a rise in their wages, they tend to benefit and this helps the economic situation of the said country or nation as seen in some economies of the world lately. Also alteration in interest rates can have different consumer effects which ranges from spending habits depending on a number of factors to other habits that may end up boosting the economy also current rate levels, expected future rate changes, confidence of the consumer, and the overall health of the economy.

Answer 2

d. leakage in spending in the economy.

Step-by-step explanation:

In the economy firms spend money on labour, input, and business expansion. While in the personal household there is spending on food, rent, and other expenses.

When money is taken out of this cycle and not used for a particular purpose then it is considered to be a leakage.

Leakages include taxes savings and imports.

Savings occurs when an individual has excess income and decides to reserve some for a future use. This fund does not have a particular use in the economy so it is considered to be a leakage.