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Economics (AS & A Level) · Oct / Nov 2023 · Paper 33 · Question 16

9708The circular flow of income

When is an increase in national income most likely to induce an increase in investment spending?

  1. Awhen firms have spare production capacity
  2. Bwhen firms use labour-intensive production
  3. Cwhen the increase in income is regarded as permanent
  4. Dwhen the increase in income is regarded as temporary

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Correct answer: C. when the increase in income is regarded as permanent

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