Question

explain the determination of national income in the short run and

long run.​

Answer 1

Short run

In the short run, the level of national income is determined by aggregate demand and aggregate supply. The supply of goods and services in a country depends on the production capacity of the community. But during the short period the productive capacity does not change.

Long run

As level of employment is determined by aggregate demand and aggregate supply, the level of income is also determined by aggregate demand and aggregate supply. ... This analysis explains determination of national income by relating income (output) to aggregate expenditure on goods and services.

Answer 2

Explanation:

In the short run, the level of national income is determined by aggregate demand and aggregate supply. The supply of goods and services in a country depends on the production capacity of the community. But during the short period the productive capacity does not change.

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