The equilibrium level of income and output is that level of income where the desired spending by all sectors of the economy equals the value of output produced and the income received from production.

Question

Quizplus · Accepted Answer

The equilibrium level of income and output is defined as the level of income at which the economy is in balance or equilibrium, where the desired spending by all sectors of the economy equals the value of output produced and the income received from production. This is because, at this level of income, there are no unplanned changes in inventories, and the economy is producing and spending at the same level. Hence, the answer is A.

The Equilibrium Level of Income and Output Is That Level