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On account of an injection of aggregate demand, the equilibrium level of income
- a)Increases
- b)Decreases
- c)Remains constant
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
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On account of an injection of aggregate demand, the equilibrium level ...
On account of an injection of aggregate demand, the equilibrium level of income increases.
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Explanation:
Injection of Aggregate Demand:
An injection of aggregate demand refers to an increase in the total spending on goods and services in an economy. This can come from various sources such as government spending, investment, or exports.
Equilibrium Level of Income:
The equilibrium level of income is the level at which aggregate demand equals aggregate supply in an economy. This is the point where there is no tendency for the level of income to change.
Effect on Equilibrium Income:
When there is an injection of aggregate demand, it leads to an increase in the total spending in the economy. This increase in spending will lead to an increase in the equilibrium level of income. This is because businesses will produce more goods and services to meet the higher demand, leading to an increase in income for factors of production.
Conclusion:
Therefore, on account of an injection of aggregate demand, the equilibrium level of income increases. This is a key concept in macroeconomics to understand how changes in spending can impact the overall level of income in an economy.
Injection of Aggregate Demand:
An injection of aggregate demand refers to an increase in the total spending on goods and services in an economy. This can come from various sources such as government spending, investment, or exports.
Equilibrium Level of Income:
The equilibrium level of income is the level at which aggregate demand equals aggregate supply in an economy. This is the point where there is no tendency for the level of income to change.
Effect on Equilibrium Income:
When there is an injection of aggregate demand, it leads to an increase in the total spending in the economy. This increase in spending will lead to an increase in the equilibrium level of income. This is because businesses will produce more goods and services to meet the higher demand, leading to an increase in income for factors of production.
Conclusion:
Therefore, on account of an injection of aggregate demand, the equilibrium level of income increases. This is a key concept in macroeconomics to understand how changes in spending can impact the overall level of income in an economy.
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On account of an injection of aggregate demand, the equilibrium level of incomea)Increasesb)Decreasesc)Remains constantd)None of theseCorrect answer is option 'A'. Can you explain this answer?
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