What constitutes the equilibrium level of national income in an economy?

The equilibrium level of national income in an economy is reached when total demand equals total supply. This balance indicates that the amount of goods and services produced (supply) matches the amount that consumers, businesses, and the government want to purchase (demand). At this point, there are no inherent forces pushing the economy to either increase or decrease production, which allows for stable economic activity without resulting surplus or shortages.

In this equilibrium situation, businesses are producing at a level where they can meet the desires of consumers, creating a stable environment for economic transactions. If total demand exceeds total supply, it can lead to inflationary pressures, while an excess of supply can result in unemployment and underused resources. Thus, achieving equilibrium is crucial for a healthy economy, as it reflects a balance between what is produced and what is consumed.

The other options touch on various aspects of economic conditions, such as savings, price stability, and inflation control, but they do not directly define the equilibrium level of national income as clearly as the balance between total demand and total supply does.