Which of the following is likely to occur as a result of falling incomes?

Question

Quizplus · Accepted Answer

Falling incomes lead to a decrease in disposable income, which in turn leads to a decrease in savings. Reduced savings mean less capital formation, as there are fewer resources available for investment. Therefore, reduced incomes are likely to result in a reduction in capital formation. Option B is unlikely as decreased incomes lead to reduced spending. Option C is also unlikely as decreased incomes can result in a higher supply of labour due to unemployment. Option D is incorrect as reduced incomes lead to decreased savings, not increased.

Which of the Following Is Likely to Occur as a Result