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Question
Equilibrium level of income is established when ______.
Options
AD = AS
S = I
both AD = AS and S = I
none of these
MCQ
Fill in the Blanks
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Solution
Equilibrium level of income is established when AD = AS and S = I.
Explanation:
AD = AS gives [C + I = C + S], which simplifies to [I = S]. The two conditions are equivalent ways of expressing equilibrium.
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