Rise in GDP leads to rise in Disposable income of people

Explanation:

Gross Domestic Product (GDP) is the total value of goods and services produced by a country in a particular period. When GDP increases, it indicates a growth in the economy, which has a positive impact on various aspects of the economy, including people's disposable income.

Here are the reasons why a rise in GDP leads to a rise in disposable income:

1. Increase in employment opportunities: A rise in GDP leads to an increase in job opportunities, which reduces the unemployment rate. When more people have jobs, it leads to an increase in their income, which in turn increases their disposable income.

2. Increase in wages: With the growth of the economy, companies tend to increase the wages of their employees to retain them and attract new talent. When wages increase, people have more money to spend, which increases their disposable income.

3. Increase in government spending: The government spends more when the economy is growing, which leads to the creation of infrastructure and social welfare programs. This spending leads to an increase in people's disposable income.

4. Increase in investments: A growing economy attracts more investments, which leads to the creation of new businesses and the expansion of existing ones. This leads to an increase in employment opportunities, which leads to an increase in people's disposable income.

Therefore, it can be concluded that a rise in GDP leads to a rise in people's disposable income, which in turn leads to increased consumption, investments, and economic growth.