For an economy as a whole,[Fill in the blank]

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Consider the question: For an economy as a whole, [Fill in the blank].
Option a: income must equal expenditure. This is the classic macroeconomic accounting identity: total income in the economy (earned by households as wages, rents, profits, etc.) is exactly equal to the total expenditure on goods and services (consumption, investment, government spending, and net exports). In a closed simplified view, the sum of all spending equals the sum of all earnings, so income and expenditure must balance.
Option b: wages must equal profit. In general, wages (compensation of employees) and profits are different components of income; there is no rule that they must be equal. The economy can have more profits or more wages depending on production, technology, and ownership structures.
Option c: consumption must equal income. While consumption is a major part of expenditure, it does not have to equal total income; some income is saved, invested, or used for other components of expenditure. Therefore, consumption can differ from overall income.
Option d: consumption must equal saving. By definition, saving is part of income not spent on consumption. In the national accounts, saving equals income minus consumption (S = Y − C). Therefore, consumption does not have to equal saving; they are typically different and collectively sum with other components to equal income or output.

For an economy as a whole,[Fill in the blank]

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For an economy as a whole,[Fill in the blank]

View Explanation

Log in for full answers

Similar Questions

Suppose GDP is $300 million, depreciation is $10 million, net payments to the rest of the world are $30 million, and statistical discrepancy is $8 million. What is the value of national income?

Which of the following purchases do national income accountants consider to be investment?

Given the information from the table below, the GDP is equal to _____ National Income $50,000 Net Income Payments to Rest of the World $3,000 Consumption of fixed capital $5,000 Statistical discrepancy $1,000

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The purchase and sale of financial securities (i.e., bonds and/or stocks of shares) is not included in calculations of investment spending because ________.

Assume a closed economy in which GDP is $20 trillion, consumption spending is $16 trillion, and government spending is $2 trillion. If the government imposes taxes of $2 trillion, what is the level of investment spending?

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GNP equals GDP income earned domestically by foreigners income that nationals earn abroad.