Suppose the Economy Has More Saving Than Investment

question 117

Essay

Suppose the economy has more saving than investment.In the simple Keynesian model,how would the economy achieve equilibrium,assuming that desired investment is fixed?

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Definitions:

Cost of Goods Sold

The direct expenses related to the production of goods sold by a company, including materials and labor costs.

Intra-entity Transfer

Transactions that occur between divisions or units within the same company, often involving the transfer of goods or services.

Depreciable Asset

An asset that loses value over time or with use and for which depreciation can be accounted to spread the cost over its useful life.

Transfer Price

The price at which goods and services are sold between divisions within the same company or between subsidiaries of the same parent company.