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LEAKAGE: A non-consumption uses of income, including saving, taxes, and imports. Leakages are combined with injections in the injection-leakage model used to identify equilibrium aggregate output in Keynesian economics. The notion of leakage is best viewed through the circular flow, in which saving, taxes, and imports are "leaked" out of the main flow between output, factor payments, national income, and consumption.

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Lesson 18: Banking | Unit 5: The Economy Page: 23 of 24

Topic: Problems <=PAGE BACK | PAGE NEXT=>

When banks are properly controlled they provide benefits, but when they get out of hand they can do a world of bad.

Problems:

  • When a bank fails to maintain adequate reserves, it runs the risk of starting a chain reaction that could cause economy-wide financial instability.

Instability:

  • Banking regulations have lessened, but not eliminated, banking instability problems.
  • Controlling instability is one challenge of monetary policy.

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RESOURCE ALLOCATION

The process of distributing resources for the production of goods and services which are then distributed for the satisfaction of wants and needs and human consumption. This is also commonly referred to by the single word "allocation." The resource allocation process is an essential part of an economy's effort to address the problem of scarcity

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Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors looking to buy either a dozen high trajectory optic orange golf balls or a large red and white striped beach towel. Be on the lookout for neighborhood pets, especially belligerent parrots.
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Sixty percent of big-firm executives said the cover letter is as important or more important than the resume itself when you're looking for a new job
"A ship ought not to be held by one anchor, nor life by a single hope. "

-- Epictetus, philosopher

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