Question

Calculate AD, AS for every level of income and the equilibrium level, from the following schedule:
(assuming that the investment is fixed at 40 crores)

Income	100	200	300	400	500	600
Consumption	120	200	280	360	440	520

(AD: 160, 240, 920, 400, 480, 560; AS:100, 200 300,400,500, 600)

Answer 1

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Therefore, aggregate supply= consumption + savings.

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.

Income	100	200	300	400	500	600
Consumption	120	200	280	360	440	520
Investment	40	40	40	40	40	40
Aggregate Supply	100	200	300	400	500	600
Aggregate Demand	160	240	320	400	480	560