Homework Answers
The correct option is b.) National income must equal the total amount of leakages from the nation's flow of income and expenditures.
C+I+G+(X-M)= DI+NT
DI = Disposable income = Consumption + Saving
C+I+G+(X-M)= C+S+NT
Subtracting C from both sides
I+G+(X-M)= S+NT
I+G+X= S+NT+M
Leakages = S+NT+M
Injections = I+G+X
It is true that disposable income must equal consumption plus savings.
Disposable income is the after tax income, it is either consumed or saved.
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3. National accounting identities Let C stand for consumption spending, I for investment, G for government...
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