# S=I in a closed economy

In a closed economy, the national income identities imply that $$S=I$$

However, the intuition is not clear to me. The saving is the part of national disposable income that is not consumed. $$I$$ is the sum of residential and nonresidential investment. When firms invest, they generally borrow to finance that investment. However, why is it the case that this would necessarily equal aggregate savings? Individuals might save, but firms (or households) need not borrow. Does $$i$$ include idle funds as well?

• Since this has been marked as duplicate of some broader questions, I'll point out that in macro models that have more than "one thing" in the economy, this isn't necessarily the case/assumption anymore economics.stackexchange.com/questions/27671/… – Fizz May 7 '20 at 5:47

Clearly you could measure this particular economy purely in grains of wheat, but if you want to do so in money terms then you would need to know the price of wheat, where say a million grains are worth $$\5$$. This would then allow you to incorporate the production and consumption of other stuff into your calculations, such as barley where say a million grains are worth $$\3$$ and yields are different, or beer produced from barley and bread from wheat, or anything else. But saving representing unconsumed production, and investment representing the other non-consumption uses, would remain equal, almost by definition