Question

select the correct answer from the drop-down menu.

some of the money that people deposit into a bank eventually becomes an injection into the economy when the bank choose an answer.

Explanation:

Analyze circular flow leakages and injections

In the circular flow model of income, savings represent a leakage from the economy because money is withdrawn from the direct flow of consumption. When individuals deposit money into a bank, it is classified as savings (a leakage).

Identify the mechanism of reinjection

For these savings to return to the circular flow as an injection, the financial sector must channel these funds back into the economy. Banks do this by lending the deposited money to businesses and individuals, which leads to investment spending (an injection). Therefore, the money becomes an injection when the bank makes loans.

Answer:

Some of the money that people deposit into a bank eventually becomes an injection into the economy when the bank <blank>makes loans</blank>.