<!-- generated: provider=openrouter model=arcee-ai/trinity-large-preview:free date=2026-02-19 source=book-4-chapter-03 -->

# Balance of Produce and Consumption

## Definition

The relationship between a nation's annual production of goods and services and its annual consumption of those goods and services, which determines whether national capital is increasing (when production exceeds consumption) or decreasing (when consumption exceeds production).

## Source Chapter

Book IV, Chapter 3

## Context

Smith distinguishes this from the balance of trade, arguing that a nation can have a favourable balance of production and consumption while simultaneously running trade deficits for extended periods, as capital accumulation continues despite negative trade balances.

## Economic Domain

General Theory

---
