In Chapter 20 we examined how national income was measured. By using the expenditure approach, we showed that GDP is always equal to the sum of consumption, investment, government purchases, and net exports. In Chapters 21 and 22 we examined the determination of national income. We showed that equilibrium national income occurs when actual national income equals the sum of desired consumption, investment, government purchases, and net exports.

a. Does this mean that national income is always at its equilibrium level?

b. Explain the important difference between "actual" and "desired" expenditures.