If Saving+Tax+Import Investment+Government spending+Export, then _____ must fall to establish macroeconomic equilibrium.

Question

If Saving+Tax+Import > Investment+Government spending+Export, then _____ must fall to establish macroeconomic equilibrium.

Quizplus · Accepted Answer

To establish macroeconomic equilibrium, the total leakages (Saving + Tax + Import) must equal total injections (Investment + Government spending + Export). If leakages exceed injections, real GDP must fall to reduce savings, taxes, and imports, thereby restoring equilibrium.

If Saving+Tax+Import > Investment+Government Spending+Export, Then _____ Must Fall to Establish