What changes occur if planned savings are less than planned investment?

Asked by Topperlearning User | 18th Apr, 2016, 02:19: PM

Expert Answer:

The following changes takes place in a situation when planned savings are less than planned investment:

i. Current stock of the producers will be sufficient to cope with the level of aggregate demand

ii. As the desired level of stock is not available, the profit will not be maximum

iii. Producers may plan for higher level of output for the subsequent years

iv. Level of output and employment will rise to the equilibrium point 

Answered by  | 18th Apr, 2016, 04:19: PM