How equilibrium level of income can …
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Meghna Thapar 5 years, 2 months ago
In an economy, equilibrium livel of income and employment is determined when AD (Aggregate Demand) is equal to AS (Aggregate Supply). ... In the following figure, AD represents aggregate demand curve and 45° line is the line of reference, where AS – AD. 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.
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