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Imports create leakages in the circular ...

Imports create leakages in the circular flow of income. Do you agree ? How in your opinion the leakages can be corrected ?

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I agree that imports cause outflow of foreign exchange implying withdrawals from the circular flow of income. Yet we cannot do away with certain necessary imports. In case of other goods, we should develop the preference for domestically produced goods, also we should develop import substitution.
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Knowledge Check

  • How many phases are there in circular flow of income?

    A
    2
    B
    3
    C
    6
    D
    5
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