When an economy is not in equilibrium,
A)planned expenditures exceed production and income.
B)there is no savings nor investment.
C)government tax revenues equal planned government expenditures.
D)production and income equal planned expenditures.

Question

Quizplus · Accepted Answer

When an economy is not in equilibrium, planned expenditures exceed production and income. This means that either consumption or investment spending is higher than the productive capacity of the economy, leading to an imbalance in demand and supply. This could lead to inflationary pressures or a recession, depending on whether the excess demand is accommodated by a rise in prices or a decline in output. Choices B, C, and D do not accurately describe the condition of an economy that is not in equilibrium.

When an Economy Is Not in Equilibrium