Question

Identify the impact of increased income of a particular group of people.

• A. Purchasing power decreases
• B. Purchasing power increases
• C. Employment increases
• D. Employment decreases

Answer 1

The correct option is B Purchasing power increases

If there is an increase in the income of a particular group of people, their purchasing power increases. This results in people buying more than what they require, causing an increase in demand. However, the supply still remains the same, and so producers increase the prices of their products. This in turn results in increased income, and the cycle continues.