Question

The Effect of Lower Income in terms of macroeconomics concept:
1) Open Economy
2) Gross Domestic Products (GDP)
3) Gross National Products (GNP)
4) Inflation
5) Productivity

The Effect of Lower Income in terms of macroeconomics concept:
1) Open Economy
2) Gross Domestic Products (GDP)
3) Gross National Products (GNP)
4) Inflation
5) Productivity

Answer 1

1) Lower income in domestic economy will induce workers to go to any other country where wage rate and living of standard is high. It will reduce the labor availability in domestic market.

2) GDP is the value of goods and services produced in an economy. Lower Income will induce consumers to reduce consumption which is the major portion of GDP. Thus, GDP falls.

3) GNP = GDP + Net factor income from abroad. Fall in GDP will reduce GNP.

4) Inflation rate will not rise because people are not willing to pay enough amount to consume goods. It will not influence producers to raise price.

5) Productivity will fall because lower income will induce them to not work. Neither they get any training with low income which raise productivity level.