In any economy as a whole, the actual savings for a given period of time must ____ the actual investments.

Question

Quizplus · Accepted Answer

This is known as the fundamental identity of macroeconomics, where savings and investments must equal each other in an economy as a whole. If savings are greater than investments, there will be a surplus of loanable funds, which leads to lower interest rates and more investment opportunities. On the other hand, if investments are greater than savings, there will be a shortage of loanable funds, which leads to higher interest rates and less investment opportunities. Therefore, the only option that makes sense is that savings and investments must be equal.

In Any Economy as a Whole, the Actual Savings for a Given