At equilibrium, aggregate supply equals aggregate demand and equals which measure?

At equilibrium, aggregate supply equals aggregate demand and equals which measure?

• A. Government policy
• B. National Income
• C. Investment
• D. Unemployment

Answer: (B)

When the goods market is in balance, the amount of output the economy plans to produce (the level of real GDP) equals the amount that buyers in the economy want to purchase. In national accounting terms, that same level of output is equal to the national income—the total income earned by all factors of production in producing that output. So, at AD = AS, the measure that both sides align with is national income. Other options aren’t the equilibrium measure: government policy is a tool that can shift supply and demand, investment is just a component of demand, and unemployment is an indicator of labor market conditions, not the level of national income itself.

When the goods market is in balance, the amount of output the economy plans to produce (the level of real GDP) equals the amount that buyers in the economy want to purchase. In national accounting terms, that same level of output is equal to the national income—the total income earned by all factors of production in producing that output. So, at AD = AS, the measure that both sides align with is national income.

Other options aren’t the equilibrium measure: government policy is a tool that can shift supply and demand, investment is just a component of demand, and unemployment is an indicator of labor market conditions, not the level of national income itself.