Multiple choice

If income is below equilibrium, then _____.

  1. stocks to unsold goods would tend to increase

  2. prices would fall

  3. investments would fall

  4. income would tend to rise

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When income is below equilibrium, aggregate demand exceeds supply, creating incentives for increased production. This adjustment process pushes income back toward equilibrium. The other options describe outcomes that would occur with income above equilibrium, not below it.