According to the income-expenditure identity, the total income of a country equals the sum of the four types of expenditure: consumption, investment, government purchases and net exports.

Question

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The income-expenditure identity is based on the idea that every dollar of income is either spent on consumption, saved for investment, used for government purchases, or used to buy exports. Therefore, the total income of a country must equal the sum of these four types of expenditures.

According to the Income-Expenditure Identity, the Total Income of a Country