In the Keynesian Model, Whenever Planned Saving Exceeds Planned Investment

question 260

Multiple Choice

In the Keynesian model, whenever planned saving exceeds planned investment

• A) there will be unplanned inventory accumulation.
• B) there will be unplanned inventory depletion.
• C) real GDP will not be influenced.
• D) the interest rate will remain unchanged.

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Definitions:

Security Market Line

A line that represents the relationship between the expected return of a market security and its risk, as measured by beta.

Market Rate

The market rate, often related to interest or exchange rates, is the prevailing rate determined by supply and demand dynamics in the open market.

Risk-free Rate

The theoretical rate of return on an investment with zero risk of financial loss, often represented by the yield on government securities.