Long- run increases in real national income can generally be traced to
A)excess of demand in the labour market that increases employment.
B)growing availability of factors and/or growing factor productivity.
C)growing demand that lead to increases in output and prices.
D)growing demand which causes continuous growth in consumer spending.
E)growing supply because higher wages will increase the participation rate.

Question

Quizplus · Accepted Answer

Long-run increases in real national income are generally the result of either an increase in the availability of factors of production or an increase in factor productivity. Option A is incorrect because an excess of demand in the labour market would cause a rise in wages and prices, which would have an adverse effect on the economy in the long run. Similarly, option C is incorrect because growing demand and increases in output and prices could lead to inflation and further economic instability. Option D is incorrect because consumer spending only represents a small fraction of total demand in the economy. Option E is incorrect because the supply of labour is not the only factor that determines economic growth.

Long- Run Increases in Real National Income Can Generally Be