Question:
The law that explains the relationship between income growth and the size of government expenditure is appropriately linked to:
The law that explains the relationship between income growth and the size of government expenditure is appropriately linked to:
Show Hint
Wagner's law emphasizes that as economies grow, government expenditures increase in relation to national income.
Updated On: Nov 21, 2025
- Wagner’s law
- Okun’s law
- Walras law
- Ricardian equivalence
Show Solution
Verified By Collegedunia
The Correct Option is A
Solution and Explanation
Step 1: Understanding Wagner's law.
Wagner's law states that as an economy grows, the government’s expenditure also tends to increase. This law connects income growth with the expansion of government spending.
Step 2: Explanation of the options.
(A) Wagner's law explains the positive relationship between income growth and government expenditure. (B) Okun’s law relates unemployment to output, not income growth and government expenditure. (C) Walras' law deals with general equilibrium in markets, not government expenditure and income growth. (D) Ricardian equivalence suggests that government borrowing does not affect overall economic activity, but it is not directly linked to income growth and expenditure size.
Step 3: Conclusion.
The correct answer is (A) because Wagner’s law explains the relationship between income growth and government expenditure.
Wagner's law states that as an economy grows, the government’s expenditure also tends to increase. This law connects income growth with the expansion of government spending.
Step 2: Explanation of the options.
(A) Wagner's law explains the positive relationship between income growth and government expenditure. (B) Okun’s law relates unemployment to output, not income growth and government expenditure. (C) Walras' law deals with general equilibrium in markets, not government expenditure and income growth. (D) Ricardian equivalence suggests that government borrowing does not affect overall economic activity, but it is not directly linked to income growth and expenditure size.
Step 3: Conclusion.
The correct answer is (A) because Wagner’s law explains the relationship between income growth and government expenditure.
Was this answer helpful?
0
0
Top GATE XH-C1 Mathematics for Economy Questions
- Consider a two-variables (x, y) linear regression model
\[ y = \alpha + \beta x + \epsilon \] where x and y are the parameters, and \( \epsilon \) is the error term. The parameters are estimated using the Ordinary Least Squares (OLS) method. Let \( \hat{\beta} \) denote the estimated value of \( \beta \). If \( \hat{\beta} = 0 \), then which one of the following statements is CORRECT? - Suppose Amar borrows ₹ 1000 from Ujala. After one year, Ujala wants ₹ 1100 back from Amar. The yield to maturity in percent (%) on this borrowing is ______(round off to one decimal place).}
Top GATE XH-C1 Banking and Finance Questions
Top GATE XH-C1 Questions
- Amma's tone in the context of the given passage is that of :
For Amma, the difference between men and women was a kind of discrimination and inequality; she felt strongly about women's rights but was not familiar with concepts like gender and patriarchy. She would have dismissed Betty Friedan because she was predominantly dealing with the problems of white middle-class women in the United States. Amma, and women of her generation, could de-link the oppression of women from the wider struggle for the liberation of human beings from class exploitation and imperialism. So Amma continued to play her role as mother and wife, but would often complain: 'I am a doormat on which everyone wipes their emotional dirt off". - Fill in the blanks by choosing the correct sequence for the following passage:
I am wearing for the first time some (i)_____ that I have never been able to wear for long at a time, as they are horribly tight. I usually put them on just before giving a lecture. The painful pressure they exert on my feet goads my oratorical capacities to their utmost. This sharp and overwhelming pain makes me sing like a nightingale or like one of those Neapolitan singers who also wear (ii)_______ that are too tight. The visceral physical longing, the overwhelming torture provoked by my (iii)_______ forces me to extract from words distilled and sublime truths, generalized by the supreme inquisition of the pain my (iv)_______ suffer. - The appropriate synonym for the word ‘ignite' in the following passage will be :
Spirituality must be integrated with education. Self-realization is the focus. Each one of us must become aware of our higher self. We are links of a great past to a grand future. We should ignite our dormant inner energy and let it guide our lives. The radiance of such minds embarked on constructive endeavor will bring peace, prosperity and bliss to this nation. - Which of the following sentences is punctuated correctly ?
- Fill in the blanks with the correct combination of tenses for the given sentence :
Darwin's work (i)_______ a related effect that (ii) ________ influenced the development of environmental politics - a 'decentering' of the human being.
View More Questions