Question

explain the equilibrium level of income with the help of consumption and investment ​

Answer 1

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It varies directly with the level of income, i.e. consumption rises with increase in income. AS curve is represented by the (C + S) curve. In Fig. ... 'E' is the equilibrium point because at this point, the level of desired spending on consumption and investment exactly equals the level of total output.

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Answer 2

Answer:

According AD and AS approach, the equilibrium is reached only when aggregate demand (AD) equals aggregate supply (AS) because at this level there is no tendency for income and output to change. ... To clear the unwanted increase in inventory, firms plan to reduce the output till AD becomes equal to AS.

Explanation:

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