Question

In the national income accounts:
(1) Total spending is always equal to total production and income.
(2) Total spending is always greater than total production and income.
(3) Total spending is always less than total production and income.
(4) Total spending may be greater than, equal to or less than total production and income.

Answer 1

Because firms pay out as income everything they receive as revenue from selling goods and services, total income, Y, equals total expenditure.

So, the correct answer is (1).