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Definition
An increase in income means that individuals or households have experienced an upward shift in their earnings over a given period of time. It typically leads to higher purchasing power and disposable income.
Related terms
Consumption: Refers to spending by households on goods and services. When income increases, people tend to consume more because they have more disposable income.
Aggregate Demand: Represents total spending by households, businesses, government entities, and foreigners within an economy. An increase in income can lead to an increase in aggregate demand.
Multiplier Effect: Describes how changes in spending can have a larger impact on the overall economy. When income increases, people tend to spend more, which then stimulates economic activity and further boosts income levels.
