Question

If aggregate demand exceeds aggregate supply, the income rises.

• A. True
• B. False

Answer 1

The correct option is A True

True.

When Aggregate demand is more than Aggregate supply, then the planned inventory would fall below the desired level. To bring back the Inventory at the desired level, the producers expand the output More output means more income. Rise in output means rise in AS and rise in income means rise in AD.