Enter the total consumption, investment, and government expenditure into the calculator to determine the aggregate income at economic equilibrium.
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Economic Equilibrium Formula
The following formula is used to calculate an aggregate income at economic equilibrium.
AI = C + I + G
- Where AI is the aggregate income ($)
- C is the total consumption ($)
- I is the total investment expenditure ($)
- G is the total government spending ($)
Economic Equilibrium Definition
What is an economic equilibrium?
Economic equilibrium is a state at which all economic forces are balanced. In the case of the formula above, this means that, for example, if the total consumption of a country increased, then so too would the aggregate income if all else stayed the same.
Sometimes economic equilibrium is used similarly to market equilibrium, but this term is more in line with single products or industries with respect to supply and demand rather than an entire economy.
How to calculate economic equilibrium?
The following steps and information are required to calculate the aggregate income of an economy at equilibrium.
First, determine the total consumption. In this example, the total consumption is measured to be $100,000.00. We will be using smaller numbers than realistic for this example so that the calculations and number of digits are made simpler.
Next, determine the total government spending. For this economy, the government spends $50,000.00.
Next, determine the total investment expenditure. This is found to be $30,000.00 for this problem.
Finally, calculate the aggregate income using the formula above:
AI = C + I + G
AI = $100,000 + $50,000 + $30,000
AI = $180,000.00