Home › Forums › Principles of Economics › Mistaking Accounting Identities for Causality › Reply To: Mistaking Accounting Identities for Causality
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Hello. Accounting identities as I understand it simply means those aggregates that are derived using accounting equations. For example, GDP or an income statement which are derived using formulas. These identities do not cause economic phenomena. Human actions geared towards meeting ends using scarce means is the fundamental level of analysis needed to understand economic outcomes.