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Why Total Income and Total Output have to Equal
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Why Total Income and Total Output have to Equal
Introduction
The concept that total income and total output are the same and equal is not clear to every individual. The total income and total output are same and equal all the time which may be consideration of income and output of a country or a company. This paper explains with a solid example that why the total income and total output have to equal.
Body
In terms of Macro-Economics, the terms total income and total output are the same things and therefore they would be always equal (Martin, 2003). The total output of an economy means that all the goods and services produced and manufactured by that economy in a particular period of time (for example one year) by the use of capital, labor, available technology and commodities or material (Kalecki, 1997). It is consequently also the total income of the particular country, nation or economy.
At the micro-economic level, this is easier to hold on the idea of equality of income and output. For instance, I am the person in my economy who made a particular amount of shoes in that particular year through the use of leather (material) and labor from my cattle. Say that the market value of the output of shoes in the year was $150,000. Then the final value of my total output is $150,000. The second way to say it is that my total income was $150,000 through the sale of shoes for the market value of $150,000 (Harry, 2019). So I got a total income of $150,000 which I have for spending on anything that I want to purchase or avail.
Conclusion
After the deep analysis of the statement with examination through an example, is has been concluded that the output of and economy and total income are equal because the value of total output and total income are same which is $150,000.
References
Harry, H. (2019). Measuring Total Output and Income Study Guide Tophat.com. Retrieved 19 July 2019, from https://tophat.com/marketplace/social-science/economics/course-notes/oer-measuring-total-output-and-income-study-guide/2829
Kalecki, M. (1997). A theory of commodity, income, and capital taxation. The Economic Journal, 47(187), 444-450.
Martin, S. (2003). Advanced industrial economics. Solutions manual. Blackwell.
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