Multiple choice

Increase in real national income takes place when

  1. savings of the public increases

  2. prices of goods increase

  3. supply of money in the economy increases

  4. total production in the economy increases
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Real national income measures the actual output of goods and services produced in an economy, adjusted for inflation. For real national income to increase, there must be an increase in the actual physical production of goods and services. Option D correctly identifies this. Increased savings (A) could indicate reduced consumption but not necessarily higher output. Higher prices (B) might increase nominal GDP but not real output. Increased money supply (C) primarily affects nominal variables (inflation) rather than real production.

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