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Economics Tuition – Video by Economics Focus

This e-learning video developed by JC Economics Tutor Simon Ng of Economics Focus examines the topic of National Income Determination and the AD-AS analysis to analyze why an increase in national income will be harmful to the economy. The question requires students to identify the possible impacts of an increase in national income on aggregate demand (AD) components, like consumption and investment expenditures. Changes in the level of national income can be interpreted in the changes of the real Gross Domestic Product (GDP), which then affects the General Price Level (GPL).

Discuss the view that a large increase in national income is often but not always desirable. [15]

Analysis of The Question


For this question, the requirement of the question is to analyse how an increase in national income is beneficial, following which evaluate how the increase in national income may be undesirable as it is associated with problems that may undermine the economy in terms of how other aims of government are affected when the economy focuses too much on the growth of national income.

Different perspectives must be set in trying to depict whether the increase in national income is beneficial or not

Source of Information


Part of knowledge needed for this question:

  • Benefits of increase in national income in terms of:

– Employment
– Improvement of standard of living
– Potentially fuel greater actual and potential growth

  • How an increase in national income may lead to demand-pull inflation if the economy is near or at full employment
  • How an increase in national income may be associated with problems such as:

– Structural unemployment
– Income inequality
– Worsen non-material standard of living

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