Question

When aggregate demand exceeds aggregate supply or when investment is greater than savings, _____________ will increase.

• A. price
• B. income
• C. savings
• D. all of the above

Answer 1

The correct option is B income

When aggregate demand is more than aggregate supply or when investment is more than saving in the economy , then the planned inventory would fall below the desired level. To bring back the Inventory at the desired level, the producers will expand the output. Therefore, as a result of more output in the economy, the income will increase.