Which of the following would increase national income ?
Correct answer: C. Increase in govt. spending
- A. Increase in taxation
- B. Increase in savings
- C. Increase in govt. spending
- D. Decrease in consumption spending
Explanation
Government spending directly adds to aggregate expenditure and raises income through the expenditure multiplier. Higher taxes, savings or lower consumption generally reduce the immediate flow of spending.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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