PRC-3 · Chapter 9 · Question 17 of 45
The national government decides to invest heavily in building a new massive hydroelectric dam, creating thousands of jobs. In the circular flow of income, this government spending is classified as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) An injection
Explanation
Government spending on infrastructure introduces new money into the circular flow, stimulating economic activity, and is therefore classified as an injection.
More Nature and Scope of Economics MCQs
- Q19An economy is producing at a specific point exactly ON its Production Possibility Frontier (PPF). To produce more of 'Good A', the economy…
- Q20A commercial bakery purchases an industrial-sized automated mixing machine to increase its bread production. Which economic factor of…
- Q21An individual has the choice between working full-time for Rs. 40,000 a month or attending college. If they choose college, the Rs. 40,000…
- Q22Which of the following is a primary characteristic of a purely Capitalist or Free Market Economy?
- Q23A statement such as 'The government ought to increase taxes on the wealthy to reduce inequality' is based on value judgments and cannot be…