How does eqilibrium level of income is determined
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Answer:
Most simply, the formula for the equilibrium level of income is when aggregate supply (AS) is equal to aggregate demand (AD), where AS = AD. Adding a little complexity, the formula becomes Y = C + I + G, where Y is aggregate income, C is consumption, I is investment expenditure, and G is government expenditure.
"The equilibrium of balance of international payment is a statement that takes into account the debits and credits of a country on international account during a calendar year".
When a country has unfavorable or adverse balance of payments, it is regarded as herald of disaster because the country by having deficit in her balance of payments either decreases her balances abroad or increases her foreign debits. When it has favorable credit balance, it is considered that the country is heading towards prosperity because by having surpluses, it either increases her foreign credits or reduces her foreign debits.