If planned leakages exceed planned injections,then Keynesians believe
A)The economy will quickly adjust to full employment if left alone.
B)Income will fall until planned leakages equal planned injections.
C)Investment will quickly rise to bring the system to equilibrium.
D)No macro equilibrium can be achieved.

Question

Quizplus · Accepted Answer

Keynesians believe that if planned leakages exceed planned injections, the economy will experience a decrease in income until planned leakages equal planned injections. This is because when there is a lack of spending (leakages), businesses will not have as many customers and will therefore reduce their output and employment levels. This decrease in income will continue until leakages and injections are in balance, which should then lead to a new equilibrium level of income.

If Planned Leakages Exceed Planned Injections,then Keynesians Believe