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How can you tell if the economy is in equilibrium?

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How can you tell if the economy is in equilibrium?

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  1. In theory the economy is always in equilibrium.

    I think it is like the conservation of energy.

    Does your question have any more background, even if only your instructors last three topics?


  2. Put simply when Aggregate Demand equals Aggregate supply.

  3. Equilibrium is always there in any system. Study how equilibrium prevails in system of energy. When hot water is mixed with cold water, heat moves from higher temperature to lower temerature(from hot water to cold water). This process or movement of heat is spontaneous. What happens when a tube of a vehicle bursts? Air moves from tube (higher density) to atmosphere (lower density) spontaneously. This movement of matter (air) occurs on its own. Economy is a system or medium of wealth. When there is difference in the level of wealth in the economy, wealth spontaneously moves from higher concentration to lower concentration and whether one wishes or not equilibrium is reached on its own.

    Remember two laws: Law of Conservation and Law of Equilibrium. Law of Conservation is the cause and Law of Equilibrium is the result. These two laws apply to matter, energy, wealth and soul alike. We may call these two laws as properties of God. Entire universe or any branch of knowlrdge or any law or theory on earth is derived from these two great laws.

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