How might an increase in average income levels affect the average price level?

According to Keynesian theory, the aggregate demand of the economy consists of consumption + investment + government spending + net exports (exports less imports). This takes into account all transactions in the economy. Therefore, if the economy is operating with an aggregate demand of AD and an aggregate supply of AS, there will be a national output of Y at an average price level of Pl.An increase in income levels will mean that consumers have more disposable income (income left after tax) and thus will increase consumption as consumers are more willing and able to demand goods. This will increase aggregate demand, shifting the curve outwards. The effect of this on average price level will depend on where the AD curve now sits on the AS curve. If aggregate demand is below full potential output (Yfc - where all resources in the economy are operating at full capacity to produce the greatest possible output) on the horizontal part of the AS curve, output will increase while average price level remains constant. However, if output is near or at full potential, a shift right of the AD curve will lead to an increase in average price level with a little, or perhaps no, increase in output as no more resources can be used.