On account of public expenditures, the size of consumption tends to increase in the economy because :…
Redistribution toward poorer households can raise consumption because their marginal propensity to consume is high. Publicly provided health and education can also increase…
Choose your answer
On account of public expenditures, the size of consumption tends to increase in the economy because :
a. Public expenditure tends to redistribute income in favour of poor and their marginal propensity to consume is high.
b. Public expenditure provides free medical care, education so as real income of beneficiaries increases and so the capacity to consume.
c. Public expenditures increases the money income of the people so consumption increases.
d. Public expenditure redistribute income in favour of rich whose marginal propensity to consume is high.
Answer and explanation
Correct answer A
Redistribution toward poorer households can raise consumption because their marginal propensity to consume is high. Publicly provided health and education can also increase beneficiaries’ real consumption capacity, supporting a and b.
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RPSC Assistant Professor (College Education)