In the simple Keynesian model, if desired investment is greater than desired saving:
A) the multiplier effect will move the economy to a lower income level.
B) income and output will rise.
C) interest rates will fall.
D) actual savings will fall as the economy moves to a lower output level.

Question

Quizplus · Accepted Answer

In the simple Keynesian model, if desired investment is greater than desired saving, it indicates that there is an excess demand for goods and services, leading to an increase in income and output as firms respond by increasing production.

In the Simple Keynesian Model, If Desired Investment Is Greater