Economy, asked by prasanta9102, 11 months ago

How does equilibrium level of income is determined? Which factors do changes in the national income?

Answers

Answered by Anonymous

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Effective demand is that level of aggregate demand (aggregate expenditure) which becomes effective in determining equilibrium level of income because it is equal to aggregate supply of output.

Thus, the level of national income is determined by and equal to effective demand.

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Answered by gratefuljarette

According to the Keynesian theory, when aggregate demand, represented by C + I curve, is equal to total output (Aggregate Supply or AS), the equilibrium level of income in an economy is determined.

Explanation:

The level of income in equilibrium corresponds to where a system or company has balanced supply and consumer demand.
If gross production and aggregate demand are equivalent, an economy is said to be at its level of income in equilibrium. In other terms, it is when GDP is the measure to total spending.

Learn more about national income

Explain the terms average income and national income

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