Consider an economy like the U.S., only with all planned spending categories in round numbers:
- C--consumption spending on domestically-produced goods--$9 trillion/year
- I--business investment spending--$2 trillion/year
- G--government purchases--$2 trillion/year
X--exports of goods and services--$2 trillion/year
What is total planned spending E in this economy this year?
If the economy is in equilibrium--if people are actually able to buy all the currently-produced goods and services they plan to--what will total income Y be in the economy this year?
￼3. Suppose that less is produced than was planned to spend. What will happen to inventories?