why is aggregate supply equal to income ?
Aggregate supply means the total money value of goods and services produced in an economy in a year.
They are (i) the supply of consumer goods and services in a year, (ii) the supply of capital goods or investment goods as they help in producing further goods. Aggregate supply is the same thing as national product. The money value of national product of goods and services is distributed among the various FACTORS OF PRODUCTION as wage, rent interest and profits as rewards for the contribution of factors to the national product. The aggregate of wages, rent, interest and profit is called national income.
They are (i) the supply of consumer goods and services in a year, (ii) the supply of capital goods or investment goods as they help in producing further goods. Aggregate supply is the same thing as national product. The money value of national product of goods and services is distributed among the various FACTORS OF PRODUCTION as wage, rent interest and profits as rewards for the contribution of factors to the national product. The aggregate of wages, rent, interest and profit is called national income.