What is the relationship between income and expenditure for an economy?
A) Income is greater than expenditure.
B) Income is less than expenditure.
C) Income equals expenditure.
D) Income could be greater or less than expenditure.

Question

Quizplus · Accepted Answer

Income and expenditure must equal each other in a closed economy, which means that all the income generated must be either consumed or saved. In an open economy, there might be a trade imbalance causing income to be greater or less than expenditure in the short term, but over the long term, they will converge towards equality.

What Is the Relationship Between Income and Expenditure for an Economy