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Planning for Development

An increase i...

Question

An increase in investment results in
1. increase in aggregate demand
2. increase in productive capacity
Select the correct options using the codes given below.

A

1 only

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B

2 only

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C

1 and 2

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D

Neither 1 nor 2

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Solution

The correct option is C 1 and 2
Changes in investment cause aggregate demand to change.Investing in skills and education can increase labour productivity. Also, investment in new technology and capital can increase productivity and the productive capacity of the economy.

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