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Question
The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
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Solution
The correct option is A True
True. Equilibrium is a situation when the aggregate demand = aggregate supply. The aggregate supply schedule shows the cost involved at each level of employment whereas the aggregate demand schedule shows the maximum earning at each level of employment. Hence, as long as the receipts are more than cost employment will increase and will stop when it reaches equilibrium.
True. Equilibrium is a situation when the aggregate demand = aggregate supply. The aggregate supply schedule shows the cost involved at each level of employment whereas the aggregate demand schedule shows the maximum earning at each level of employment. Hence, as long as the receipts are more than cost employment will increase and will stop when it reaches equilibrium.
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