In which case is total expenditure in an economy not equal to total income?

Question

In which case is total expenditure in an economy not equal to total income?

Answer 1

Disequilibrium.

Answer 2

I think it's called a deficit

Answer 3

in general we want to keep this equation

total expenditure== total income == total production

this save alot of our time... but to do so we will have to consider all the leakages (withdrawals) are equal to injections,.,.,.

so in 2 sector economy (house hold and busines sector) the leakage is S(saving) and injection is I (Investment) if they are not equal(i.e. S is not equal to I) then total expenditure is not equal to total income

and in 3 sector economy (house hold ,busines sector and the government) leakages are S (saving)and T(taxes) .... and the injections are I(investment) and G(government expenditure on the economy) if S+T is not equals to I+G then total expentiture is not equal to total income

and in 4 sector open economy  (house hold ,busines sector  the government and foreign sector) leakages are S (saving), T(taxes) and M (imports) .... and the injections are I(investment)  G(government expenditure on the economy) and X(exports)  so if S+T+M is not equals to I+G+X then total expentiture is not equal to total income

:)



i hope you are clear now key is injections must be equal to withdrawls in order to keep

total expenditure== total income == total production