Multiple choice

Equilibrium income is that level at which

  1. full employment exists

  2. actual saving is equal to actual investment

  3. the community is spending exactly all of its income on consumption

  4. the amount which society wishes to spend on investment is equal to the amount of its income which is does not wish to spend on consumption
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

At equilibrium income, planned investment equals saving. Since saving is income not spent on consumption, this means the amount society wishes to spend on investment equals the amount of income not spent on consumption. Option A describes full employment (not necessarily equilibrium), Option B is tautological (actual always equals actual in national accounts), and Option C describes zero saving.

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