At equilibrium GDP, the amount households save (leakages) and the amount businesses plan to invest (injections) are
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At equilibrium GDP, the amount households save (leakages)
and the amount businesses plan to invest (injections) are equal. Any excess of saving over planned investment will cause a shortage of total spending, forcing GDP to fall. Any excess of planned investment over saving will cause an excess of total spending, inducing GDP to rise. The change in GDP will in both cases correct the discrepancy between saving and planned investment.
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Related Book For
Economics Principles Problems And Policies
ISBN: 9780073511443
19th Edition
Authors: Campbell Mcconnell ,Stanley Brue ,Sean Flynn
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