Assuming there is no government or foreign sector, the economy will be in equilibrium if, and only if, planned investment equals actual investment.

Question

Quizplus · Accepted Answer

In a closed economy with no government or foreign sector, planned investment and actual investment are the only components of aggregate demand. Therefore, if planned investment equals actual investment, aggregate demand will equal actual output, and the economy will be in equilibrium.

Assuming There Is No Government or Foreign Sector, the Economy