The equality of income, Y, with expenditure, E, in a two-sector economy follows the reason that all the income from economic activities is spent on expenditure (C, I, or S). It can also be observed that a closed economy cannot export or import but participates in internal activities. The equation of a closed economy is represented by Y= C + I+ S, where c is the consumption expenditure, I is the investment expenditure, and s is the savings expenditure.
Why is it that in a simple two-sector closed economy must income equals expenditure?
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Academic.Tips. 2021. "Why is it that in a simple two-sector closed economy must income equals expenditure?" July 23, 2021. https://academic.tips/question/why-is-it-that-in-a-simple-two-sector-closed-economy-must-income-equals-expenditure/.
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Academic.Tips. "Why is it that in a simple two-sector closed economy must income equals expenditure?" July 23, 2021. https://academic.tips/question/why-is-it-that-in-a-simple-two-sector-closed-economy-must-income-equals-expenditure/.
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"Why is it that in a simple two-sector closed economy must income equals expenditure?" Academic.Tips, 23 July 2021, academic.tips/question/why-is-it-that-in-a-simple-two-sector-closed-economy-must-income-equals-expenditure/.
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