Question

The equilibrium condition of circular flow of income in a closed economy is ______.

Options

• S = I

• S + T = I + C

• S + T + M = I + G + X

• C + I = S + I

Answer 1

The equilibrium condition of circular flow of income in a closed economy is S = I.

Explanation:

• This represents the equilibrium condition of the circular flow of income in a closed economy, where savings (S) are equal to investment (I).
• This ensures that all income generated is either consumed or invested, maintaining equilibrium in the economy.