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Question
What happens when the Investment is lesser than Savings?
Options
Aggregate Demand is more than Aggregate Supply.
Aggregate Demand is less than the Aggregate Supply.
Aggregate Demand is equal to the Aggregate Supply.
Aggregate Demand is independent of Aggregate Supply.
MCQ
Solution
Aggregate Demand is less than the Aggregate Supply.
Explanation:
When investment is less than savings, economic expenditure is less than what producers expected, resulting in an undesirable build-up of unsold stock. As a result, AD falls short of AS.
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Aggregate Demand and Its Components - Investment
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