Question

If income in terms of wage rate ______________, consumption expenditure _____________.

• A. increases, decreases
• B. increases, increases
• C. decreases, increases
• D. decreases, decreases

Answer 1

Answer: (B)

increases, increases

If income in terms of wage rate increases, then consumption expenditure also increases which is called the wage-price spiral where the wages are increased due to excessive price in the economy and price in increased due to excessive wage and consumption demand in the economy.