According to Engel's law as income rises ?
Correct answer: C. The percentage spent on other categories increase
- A. The percentage spent on food rises
- B. The percentage spent on housing increases
- C. The percentage spent on other categories increase
- D. The percentage spent on savings remains constant
Explanation
Engel’s law states that as income rises, the percentage spent on food falls, leaving a greater share for non-food categories such as education, recreation and durable goods. Thus the share allocated to other categories increases.
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