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Economics glossary · The macroeconomy

Taxation

What taxation means in economics, as one of the three leakages, with an example and a question to test yourself.

Definition
Taxation
Taxation is money paid to the government out of income or spending, which households therefore cannot spend on firms' output.
Example

Can you think of an example of taxation?

Test yourself

Can you name the three leakages?

Learn it properly: the module

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