4.2.3—Circular flow equilibrium

The circular flow is in equilibrium when planned injections equal planned leakages. If injections exceed leakages, income tends to rise; if leakages exceed injections, income tends to fall, subject to model assumptions.

Marginal propensities and multiplier calculations are not needed here; focus on the direction and the condition for stability.

If I + G + X equals S + T + M, planned spending matches withdrawals and aggregate income has no built-in pressure to change.

Equilibrium does not mean full employment or zero inflation; it is a flow condition that can occur at different output levels.