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| 1. |
Disucss, the changes that will take place in the economic when planned saving is less than planned investment. |
| Answer» Solution :This would result in undesired build-up of unsold stock. Consequently, AD falls short of AS. Due to excess supply resulting from the stock piling of unsold goods, i.e., UNINTENDED inventories, the producers will cut down employment and will produce less. National income will fall and as a result PLANNED SAVING will start Jailing until it becomes equal to planned INVESTMENT. It is at this POINT that equilibrium level of income is determined. | |