If planned investment is larger than saving, then real GDP will increase as the economy adjusts towards equilibrium.

Question

Quizplus · Accepted Answer

When planned investment exceeds saving, it indicates that businesses are planning to invest more in expanding or modernizing their production capacity. As a result, the economy will adjust towards equilibrium by increasing real GDP, as businesses hire more workers and invest in capital goods to meet the demand for increased production. This increased production will, in turn, lead to an increase in national income and output, and drive economic growth.

If Planned Investment Is Larger Than Saving, Then Real GDP