Econ 100 Explain why an economy's income must equal its expenditure.

# Econ 100 Explain why an economy's income must equal its expenditure.

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Econ 100 Explain why an economy's income must equal its expenditure.

why an economy's income must equal its expenditure.

The reason that an economy's income must be same as its expenditure is simply that every transaction has two parties: a buyer and a seller. Every dollar of spending by some buyer is a dollar of income for some seller. Thus, the transaction contributes equally to the economy's income and to its expenditure. Hence no disparity can exist between the two.

Sometimes at the beginning of an economic boom, total employment increases sharply but the unemployment rate does not fall. Why might this occur?

The unemployment rate is defined as U/LF, where LF is the labor force and U is the number of unemployed workers. Note that LFEU where E is the number of employed workers. To be classified as an unemployed worker, however, a worker must be...

Econ 100
jacob

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Excerpt from file: why an economy's income must equal its expenditure. The reason that an economys income must be same as its expenditure is simply that every transaction has two parties: a buyer and a seller. Every dollar of spending by some buyer is a dollar of income for some seller. Thus, the transaction

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