Which of the following is used in determining the level of equilibrium income ?

Aggregate demand and national income

The correct answer is option 3: Aggregate demand and national income

The level of equilibrium income is determined by the intersection of aggregate demand and national income.

• Aggregate demand (AD) represents the total demand for goods and services in an economy.
• National income is the total income generated within an economy.

When aggregate demand equals national income, the economy is in equilibrium. This means that the total amount of goods and services produced (national income) is equal to the total amount demanded by consumers, businesses, and the government (aggregate demand).

National income, i.e., Y is equal to Aggregate Supply, i.e., AS. And equilibrium happens when AD =AS.

So, as per options given in the question, equilibrium income is determined when AD and Y are equal.