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JAMB Economics 2011 Question 29

Question 29

National Income

If aggregate demand is lower than total output in an economy, national income will

  1. A.be constant
  2. B.be at equilibrium
  3. C.increase
  4. D.fall.
Show the answer and explanation

Answer: D (fall.)

Explanation

When spending is less than output, unsold goods pile up, firms cut production and national income falls.