Full Employment Level Of National Income And Equilibrium Level Of National Income:
Economics notes
Full Employment Level Of National Income And Equilibrium Level Of National Income:
➡️ Gross Domestic Product (GDP): The total value of all goods and services produced in a country in a given period of time.
➡️ Employment: The number of people employed in a country.
➡️ Inflation: The rate at which prices for goods and services increase over time.
What is the difference between full employment level of national income and equilibrium level of national income?
The full employment level of national income refers to the level of output where all available resources in the economy are being utilized, and there is no involuntary unemployment. On the other hand, the equilibrium level of national income is the level of output where aggregate demand equals aggregate supply, and there is no tendency for output or prices to change.
How can an economy achieve full employment level of national income?
An economy can achieve full employment level of national income by increasing aggregate demand through government spending, tax cuts, or monetary policy. This will increase the demand for goods and services, leading to an increase in output and employment. Additionally, policies that promote education and training, as well as investment in infrastructure and technology, can also increase the productivity of the workforce, leading to higher levels of output and employment.
What are the consequences of operating below the full employment level of national income?
Operating below the full employment level of national income can lead to involuntary unemployment, which can have negative social and economic consequences. This can result in a loss of output and income, as well as a decrease in consumer spending and investment. Additionally, it can lead to a decrease in tax revenue and an increase in government spending on social welfare programs. Overall, operating below the full employment level of national income can lead to a decrease in economic growth and stability.