What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?
A)a decline in the rate of interest
B)an unintended accumulation of inventories by businesses
C)a rise in the real GDP
D)The federal budget will automatically move toward a deficit.

Question

Quizplus · Accepted Answer

In a private closed economy with unemployed resources, an excess of planned investment over saving will lead to an increase in aggregate demand, which in turn will cause real GDP to rise as businesses increase production to meet the higher demand.

What Will Be the Effect of an Excess of Planned