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Adjutment machanism when Ex ante Investment …

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Adjutment machanism when Ex ante Investment is more th ex ante saving?

Posted by Animesh Jain 6 years, 7 months ago

CBSE > Class 12 > Economics

1 answers

Charu Gautam 6 years, 7 months ago

Incase saving is less than investment it implies a situation when of fall in expenditure through saving is less than the rise in expenditure through investment accordingly aggregate expenditure in the economy would be greater than what is required to buy the planed output it is a situation of higher AD thanAS the producers would suffer the loss of unfulfilled demand this will prompt the producer to plant higher output ,higher output would mean higher income and higher income would mean higher saving the process would continue tillS=I here again the equality between S and l restored through change in level of income

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