Why may policymakers not be satisfied with only an increase in national income in macroeconomics?
Answer and explanation
Correct answer: Because employment, distribution and price stability are also important
A rise in national income indicates greater measured economic activity, but it does not automatically show who receives the income, whether adequate employment has been created or whether prices are stable. Growth may be accompanied by inequality, inflation, regional disparities or environmental costs. Policymakers therefore examine several indicators, including real income, employment, inflation, distribution and welfare, before judging economic performance.
Frequently asked questions
What is the correct answer to this question?
Because employment, distribution and price stability are also important
Why is this the correct answer?
A rise in national income indicates greater measured economic activity, but it does not automatically show who receives the income, whether adequate employment has been created or whether prices are stable. Growth may be accompanied by inequality, inflation, regional disparities or environmental costs. Policymakers therefore examine several indicators, including real income, employment, inflation, distribution and welfare, before judging economic performance.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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