The inequality of saving and planned investment:
A)is attributable to a low level of consumption.
B)may be of considerable significance because of the subsequent changes in income, employment, and the price level.
C)is of no consequence because a compensating inequality of tax collections and government spending will always occur.
D)is of no consequence because saving and actual investment will always be equal.

Question

Quizplus · Accepted Answer

The inequality of saving and planned investment can have significant effects on the economy, such as changes in income, employment, and the price level. This is because when there is a gap between saving and planned investment, it can result in a decrease in consumption and ultimately reduced economic growth. It cannot be compensated by tax collections and government spending, nor will it always result in actual investment equaling saving.

The Inequality of Saving and Planned Investment