When planned investment exceeds saving in a private closed economy:
A) Aggregate expenditures will equal GDP
B) Aggregate expenditures will exceed GDP
C) Aggregate expenditures will be less than GDP
D) Consumption plus investment will equal GDP

Question

Quizplus · Accepted Answer

When planned investment exceeds saving in a private closed economy, aggregate expenditures will exceed GDP. This is because aggregate expenditures include consumption, investment, and government spending, and when investment exceeds saving, it means that businesses are planning to invest more than households are saving. This will lead to an increase in aggregate expenditures and an increase in GDP.

When Planned Investment Exceeds Saving in a Private Closed Economy