For an economy as a whole,

Question

Quizplus · Accepted Answer

In order for an economy as a whole to be in equilibrium, aggregate income (which includes wages, salaries, profits, and other sources of income) must equal aggregate expenditure (which includes consumption, investment, government spending, and net exports). This is known as the income-expenditure identity and is essential for the overall functioning and stability of the economy. Wages do not necessarily have to equal profit, consumption does not have to equal saving, and the number of buyers does not have to equal the number of sellers in order for the economy to be in equilibrium.

For an Economy as a Whole