‭ ) In the short run, increased optimism about demand conditions by businesses in India would likely shift the aggregate

demand (AD) curve to the right‬

a
‭. This is because businesses are more optimistic, leading to higher investment and consumer spending. As a result, the new equilibrium output and price‬
‭levels would increase. Output would rise, indicating economic expansion, and prices would increase due to increased demand.‬

‭ ) In the long run, assuming no change in the long-run aggregate supply (LRAS) curve, the aggregate demand shift would not affect the aggregate output‬
b
‭in the economy. The economy would return to the long-run equilibrium level of output, which is determined by factors like technology, labor, and capital.‬
‭In the long run, prices may continue to rise, but the output would not be permanently affected.‬

‭ he difference between the short and long run lies in the adjustment period. In the short run, prices and wages may not adjust instantaneously, leading to‬
T
‭changes in output. However, in the long run, wages and prices are more flexible, allowing the economy to return to its natural level of output. Therefore,‬
‭the short-run increase in output due to increased demand optimism is temporary, and the economy returns to its long-run equilibrium over time.‬

‭ ational income is a valuable indicator of economic performance, but it has limitations in capturing the overall well-being of an economy.‬
N
‭Here are some reasons why an alternate measure of human well-being is considered necessary:‬

‭ . *Non-Market Activities:* National income primarily focuses on market transactions, excluding non-market activities like household work‬
1
‭and volunteerism. These activities contribute significantly to well-being but are not accounted for in traditional economic measures.‬

‭ . *Income Distribution:* National income does not provide insights into income distribution among the population. A high national income‬
2
‭may not necessarily mean equitable wealth distribution, and disparities can affect overall well-being.‬

‭ . *Quality of Life:* Well-being involves factors beyond monetary transactions, such as healthcare, education, and environmental‬
3
‭sustainability. National income does not consider the quality of life indicators that directly impact the well-being of individuals.‬

‭ . *Externalities:* Economic activities can have positive or negative externalities, impacting well-being. For instance, high industrial production‬
4
‭might boost national income but could lead to environmental degradation, affecting the overall health and happiness of the population.‬

‭ . *Social Indicators:* Well-being encompasses social factors like education, healthcare, and social cohesion. Social indicators provide‬
5
‭a more holistic view of a society's overall welfare, complementing economic measures like national income.‬

‭Alternative Measures of National Income:‬

‭ . *Gross Domestic Product (GDP):* GDP is the total market value of all final goods and services produced within a country in a specific‬
1
‭time period. It includes consumption, investment, government spending, and net exports.‬

‭ . *Gross National Product (GNP):* GNP adds net income earned from abroad to GDP, considering the income earned by a country's‬
2
‭residents domestically and abroad.‬

‭ . *Net National Product (NNP):* NNP adjusts GNP for depreciation (wear and tear on capital goods), providing a measure of the net‬
3
‭output available for consumption and investment.‬

‭ . *Gross National Income (GNI):* GNI is similar to GDP but includes net income earned from abroad. It provides a measure of the total‬
4
‭income earned by a country's residents.‬

‭ . *Per Capita Income:* This measure divides the national income by the population, giving an average income per person. It provides‬
5
‭an indication of the average standard of living but does not consider income distribution.‬