Question

Production increases
Income increases
Expenditure increases

Write with examples how the above is related to each other.

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Answer 1

An increase in income enables people to spend more. For example, if you previously warned ₹500 and spent ₹50. You got a promotion and started earning ₹1000. So, you can now spend ₹100.
Hence an increase in income increases expenditure
An increase in expenditure increases the aggregate demand for products. Due to higher sales, producers will earn greater profits. Producers can now reinvest these profits into the business. Thus, increasing production

Answer 2

Answer:

An increase in income enables people to spend more. For example, if you previously warned ₹500 and spent ₹50. You got a promotion and started earning ₹1000. So, you can now spend ₹100.

Hence an increase in income increases expenditure

An increase in expenditure increases the aggregate demand for products. Due to higher sales, producers will earn greater profits. Producers can now reinvest these profits into the business. Thus, increasing production

Explanation:

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