Saving And
Investment Approach for determination of equilibrium income and Output
An
alternative approach to the determination of equilibrium level of income is
Saving Investment approach.According to this approach, equilibrium is struck at
that level where planned investment equals planned saving.
i.e
S = I
Since
S refers to ‘withdrawal’ from the circular flow and I refers to ‘injection’
into the circular flow, equilibrium condition can be stated as:
Withdrawal = injection
