For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.

Question

Quizplus · Accepted Answer

In an economy, every transaction involves a buyer and a seller. The seller receives income from the buyer, which is equal to the expenditure of the buyer. When we sum up all the income earned by producers in an economy, it is equal to the total expenditure or spending of all buyers in that economy. Therefore, income equals expenditure for the economy as a whole.

For an Economy as a Whole, Income Equals Expenditure Because