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JAMB Economics 1995 Question 46

Question 46

National Income

Ajanka, a medical student entitled to an annual allowance of ₦6,000, decides to leave the university to take up a job where he earns ₦7,000 per annum. By this singular act, the national-income level will

  1. A.increase by ₦1,000
  2. B.decrease by ₦7,000
  3. C.increase by ₦7,000
  4. D.increase by ₦13,000.
Show the answer and explanation

Answer: C (increase by ₦7,000)

Explanation

A student allowance is a transfer payment and is not counted in national income, but his ₦7,000 wage is payment for work, so national income rises by ₦7,000.