An equilibrium level of national income implies the economy is operating at full employment.

Question

Quizplus · Accepted Answer

An equilibrium level of national income simply means that aggregate demand equals aggregate supply; it does not necessarily imply the economy is operating at full employment. Full employment refers to a situation where all available labor resources are being used in the most economically efficient way, but an economy can be in equilibrium at levels of output below or above full employment.

An Equilibrium Level of National Income Implies the Economy Is