At the short run equilibrium of income and employment, __________.

Option 1 -> Incorrect. Saving and consumption are components of income, not equal to each other at equilibrium.

Option 2 -> Incorrect. There is no theoretical basis for planned investment to equal planned consumption at equilibrium.

Option 3 -> Correct. At short-run equilibrium, ex-ante (planned) saving must equal ex-ante (planned) investment.

Option 4 -> Incorrect. This mixes planned and actual values; equilibrium requires equality of planned variables.

Hence, Ex-ante saving = Ex-ante investment -> At short-run equilibrium, the economy is in balance when planned saving equals planned investment. This is because when households plan to save exactly what firms plan to invest, there are no unintended inventory changes or production adjustments needed. If ex-ante saving exceeds ex-ante investment, there would be excess supply leading to falling output. If ex-ante investment exceeds ex-ante saving, there would be excess demand leading to rising output. Only when they are equal does the economy reach a stable equilibrium level of income and employment. Note that ex-post (actual) saving always equals ex-post investment by accounting identity, but equilibrium specifically requires the ex-ante equality -> correct