ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -On account of an injection of aggregate demand, the equilibrium level of income increases.

Detailed explanation-2: -According to the Keynesian theory, the equilibrium level of income in an economy is determined at the intersection point of AD and AS curves. Aggregate demand means the total demand for final goods in an economy. The AD curve has a positive slope, which means that when income increases, AD (expenditure) also increases.

Detailed explanation-3: -Income and Wealth As household wealth increases, aggregate demand typically increases. Conversely, a decline in wealth usually leads to lower aggregate demand. When consumers are feeling good about the economy, they tend to spend more and save less.

Detailed explanation-4: -Changes in Supply & Demand and their Effects on Equilibrium As the supply and demand curves shift, the equilibrium point will shift as well. Thus, changes in supply and demand that lead either of the curves to shift will lead to changes in equilibrium.