Question

Describe the adjustments that may take place in an economy when ex-ante savings are greater than ex-ante investments.​

Answer 1

Explanation:

Ex-Ante Investments are greater than Ex-Ante Savings:

Thus, there will be unplanned depletion of inventory (or unplanned dis-investment). In response to this, to increase the stock of output, the producers plan to expand production in the next period; thereby increase the employment of factors of production.