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Aggregate Output and Income

帮考网校2020-08-05 14:53:08

Aggregate output refers to the total amount of goods and services produced by an economy in a given period of time, usually a year. It is measured by Gross Domestic Product (GDP), which includes all final goods and services produced within a country's borders, regardless of who owns the productive assets.

Aggregate income, on the other hand, refers to the total amount of income earned by all factors of production (land, labor, capital, and entrepreneurship) in an economy in a given period of time. It includes wages and salaries, profits, rents, and interest earned by households, businesses, and the government.

Aggregate output and income are closely related as they both measure the overall economic activity of a country. When aggregate output increases, it leads to an increase in aggregate income as more goods and services are produced, resulting in higher wages and profits. Similarly, when aggregate income increases, it leads to an increase in aggregate demand, which in turn stimulates production and leads to an increase in aggregate output.

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Aggregate Output and Income

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