Considering the circular flow model

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Considering the circular flow model (for a four sector economy), if leakages exceed injections at some income level, we can know that the level of aggregate demand also must exceed the level of aggregate supply we can know that the system cannot be in equilibrium if there is a deficit in the country's trade balance we can know that the system cannot be in equilibrium if there is a deficit in the country's budget (i.e., taxes exceed govt spending) we can know that saving must equal investment none of the above are (necessarily) true.

Reference no: EM131162036

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