Leakage of Income – Leakage represents that income which is saved and not returned back to income flow. If factors of production do not spend their entire income on purchasing goods and service is called the leakage of income. Similarly, if firms do not spend their income and keep away a part of their income as undistributed income and profit, it will also be called leakage from income flow.
Thus, “ Leakage of income is that income which is not returned to circular flow as an expenditure and is kept away from the flow.” In other words, “ Leakage gives the squeezing affect on national income.” Injection of Income : - Injection of income is that income addition which takes place in circular flow from outsources other than circular flow. Injection of income causes an increase in the process of income generation in the economy.
In other words, “ Injection gives the expanding effect on National income.”
