When saving is less than planned investment in the aggregate expenditures model of a private closed economy, then
A)real GDP will decrease
B)the rate of interest will decline.
C)there will be a decline in the price level.
D)there will be a rise in real GDP.

Question

Quizplus · Accepted Answer

When saving is less than planned investment, it indicates that businesses are investing more than what households are saving, leading to an increase in aggregate demand and thus causing real GDP to rise.

When Saving Is Less Than Planned Investment in the Aggregate