If aggregate demand is lower than total output in an economy national income will

Answer Details

If aggregate demand, which refers to the total amount of goods and services demanded by all consumers, firms, and the government in an economy, is lower than total output, which refers to the total amount of goods and services produced in an economy, the national income will fall. National income, also known as Gross Domestic Product (GDP), is a measure of the total income generated in an economy by the production of goods and services. If aggregate demand is lower than total output, it means that consumers, firms, and the government are not demanding enough goods and services to keep pace with the amount being produced. As a result, some of the output will go unsold, and businesses will start to cut back on their production, leading to lower economic activity and a decrease in national income. In simple terms, if people are not buying enough of what is being produced, the economy will slow down, and the national income will decrease.