In a simple economy with no government and no foreign trade, aggregate income is in equilibrium when:
A) tax revenues equal government spending.
B) planned savings equals planned investment.
C) planned investment equals planned consumption.
D) consumption equals aggregate income.

Question

Quizplus · Accepted Answer

In a simple economy with no government and no foreign trade, aggregate income is in equilibrium when planned savings equals planned investment. This is because, in such an economy, all income not used for consumption is saved, and these savings are assumed to equal the amount businesses plan to invest.

In a Simple Economy with No Government and No Foreign