Equilibrium Level of the National Income

Abstract

The equilibrium level of the national income is defined as that point where the aggregate supply and the aggregate demand are equal to each other. We are here restating the equilibrium point accepted in Chapter 4. Once that point is reached the entrepreneurs will individually be at their profit maximising positions and they will therefore have no reason to change from that level of production and national income. The economy will remain in equilibrium until some outside, or exogenous, force moves it to a new equilibrium position.