Aggregate Consistency Conditions

When you're setting up the basic conditions of an economic model (something we know you do with most of your spare time), you have to include the aggregate consistency conditions. These are the basic rules of the game. But they are so basic that they go beyond "rules" to become "oh, wait, we have to say that kind of stuff out loud."

In baseball, an aggregate consistency condition would be something like "the total number of hits given up by pitchers in a game must equal the total number of hits recorded by batters." Really basic stuff, but necessary when you're trying to get to the bottom of something as complicated as the economy.

So the big three aggregate consistency conditions that come up in econ are as follows:

1) Total production equals total consumption...in other words: someone makes it; someone uses it.
2) Total dollars lent out equals total dollars borrowed.
3) Total amount of currency held by market participants equals the total amount of currency put into the system.

Seems pretty basic. But the first rule of Euclid's geometry is "things equal to the same thing are equal to each other." From that, you can eventually build the Parthenon.