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, resulting in a rise in real GDP as businesses increase production to meet the higher demand.

What Will Be the Effect of an Excess of Planned