Equilibrium income is that level of income:
A)which the economy always produces.
B)toward which the economy gravitates in the short-run.
C)which an economy is capable of producing without generating accelerating inflation.
D)which an economy is capable of producing without generating unemployment.

Question

Quizplus · Accepted Answer

Equilibrium income refers to the level of income or output where the aggregate demand equals aggregate supply in the economy. This is the point toward which the economy tends to move in the short run, as adjustments in prices, wages, and output occur to balance demand and supply.

Equilibrium Income Is That Level of Income