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Ex Ante Investment

The equilibri...

Question

The equilibrium level of income is defined where

A

AS > AD

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B

AD > AS

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C

AS = AD

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D

Cannot be determined

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Solution

The correct option is C
AS = AD

The equilibrium level of income is that level of income where AS = AD.

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Q. In determination of Equilibrium Level of Income by AD-AS approach, AD curve is represented by ____________.

Q. How is the equilibrium level of income attained through AD and AS approach?

Q. 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)

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Income	0	10	20	30	40	50	60	70	80	90	100
Consumption	20	25	30	35	40	45	50	55	60	65	70

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