_______ states that as real GNP per capita rises, people demand relatively more social goods and relatively fewer private goods?
Correct answer: C. Wagner's law
- A. incomes policy
- B. Moral hazard
- C. Wagner's law
- D. Fiscal policy
Explanation
Wagner's law states that as real income per person increases, demand for public or social goods and government services tends to rise relatively faster than demand for private goods. The other options concern taxation, incentives, or general government policy rather than this income-related pattern.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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