Which of the following statements is correct for a closed economy with no government?
A) Planned saving equals planned investment only at the equilibrium level of domestic output.
B) All levels of domestic output where planned investment exceeds planned saving will be too high for equilibrium.
C) Planned and actual investment are identical at all possible levels of domestic output.
D) Saving equals actual investment only at the equilibrium level of domestic output.

Question

Quizplus · Accepted Answer

In a closed economy with no government, planned saving equals planned investment only at the equilibrium level of domestic output. This is because, at equilibrium, all income (output) that is not consumed is saved, and this saving is exactly equal to the investment in the economy.

Which of the Following Statements Is Correct for a Closed