Final answer:
Option (a) I + G + X > S + T + IM would not indicate an equilibrium state in the economy because the inequality shows that aggregate expenditure is greater than aggregate production, which disrupts the balance required for equilibrium. In contrast, option (b) represents an equilibrium state as spending and income are equal. The correct answer is option b.
Step-by-step explanation:
To determine which of the provided options would not indicate equilibrium in an economy, we must understand how economic equilibrium is identified. Equilibrium occurs when aggregate expenditure equals aggregate production.
In economic terms, the aggregate expenditure is the total amount being spent on national output (real GDP), which can be expressed as AE = C + I + G + X - M, where C is consumption, I is investment, G is government spending, X is exports, and M is imports. The point of equilibrium can be illustrated on a Keynesian cross diagram, where the aggregate expenditure curve intersects the 45-degree line, which represents points where the output (or national income) is equal to aggregate expenditure.
Based on this definition, option (a) I + G + X > S + T + IM would not indicate equilibrium since the inequality suggests that the investment, government spending, and exports are greater than savings, taxes, and imports, resulting in aggregate expenditure being greater than aggregate production.
In contrast, option (b) I + G + X = S + T + IM indicates an equilibrium state because the values on both sides of the equation are equal, representing a balance between total spending and total income within the economy. Therefore, production, costs, and income are aligned, signaling an equilibrium condition.