The correct answer is option1: Aggregate Supply and Income
Let's analyze each pair:
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Aggregate Supply and Income. This is correct. Aggregate Supply (AS) in an economy is equal to the total output or income (Y) since AS represents the value of goods and services produced, which corresponds to the income generated from producing them.
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Aggregate Demand and Aggregate Supply. This is not always correct. While aggregate demand (AD) and aggregate supply (AS) are equal at the equilibrium level of output, they are not necessarily equal at all times. Imbalances between AD and AS can lead to inflationary or recessionary gaps.
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Marginal Propensity to Save and Marginal Propensity to Consume. This is incorrect. The Marginal Propensity to Save (MPS) and the Marginal Propensity to Consume (MPC) are complementary and their sum is always 1, but they are not equal. For instance, if MPC is 0.8, then MPS is 0.2.
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Average Propensity to Save and Average Propensity to Consume. This is incorrect. Similar to MPS and MPC, the Average Propensity to Save (APS) and Average Propensity to Consume (APC) are complementary and their sum is always 1, but they are not equal. For example, if APC is 0.7, then APS is 0.3.
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