Economics · Determination of Income and Employment
Keeping the tax rate (T) constant, if government expenditure (G) increases, arrange the logical sequence of events describing the effect on total income and output: (A) Government spending causes a deficit if G exceeds T (B) Rise in planned aggregate expenditure (C) Aggregate demand schedule shifts upward (D) Equilibrium income level increases Choose the correct order of cause and effect sequence from the options given below:
- 1(C), (B), (D), (A)
- 2(A), (B), (D), (C)
- 3(A), (C), (B), (D)
- 4(B), (A), (D), (C)✓
Correct answer
(B), (A), (D), (C)
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