An economy's ______ equals its ______.
Question
An economy's ______ equals its ______.
Solution
An economy's income equals its expenditure.
This is a fundamental identity in macroeconomics, based on the circular flow of income and expenditure in an economy. The total income of an economy must equal the total expenditure on the economy's output of goods and services. This is because every dollar spent by a buyer becomes income for a seller.
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