The total income of everyone in the economy is exactly equal to the total:
A) expenditure on the economy's output of goods and services.
B) consumption expenditures of everyone in the economy.
C) expenditures of all businesses in the economy.
D) government expenditures.

Question

Quizplus · Accepted Answer

This is known as the fundamental identity of national income accounting. The income earned by individuals, businesses, and the government in an economy all eventually becomes expenditure on the output of goods and services. This means that the total income in the economy must be equal to the total expenditure on the goods and services produced in the economy.

The Total Income of Everyone in the Economy Is Exactly