Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

At a particular price level, when aggregate demand for final goods equals aggregate supply of final goods, the product market reaches to its _________.

Options:

Ex-ante consumption

Autonomous consumption

Investment multiplier

Equilibrium level

Correct Answer:

Equilibrium level

Explanation:

When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium.  This means that there is no excess supply or excess demand for goods and services, and the economy is operating at its full potential.

Aggregate demand for final goods consists of ex ante consumption, ex ante investment, government spending etc.