Question

Explain with the help of diagram and using saving investment approach . the determination of equilibrium output and income level in an economy . what happens when economy is not in equilibrium and saving exceeds investment.

Answer 1

Answer:

When Saving is more it brings leakage, where as Investment is high it is known as Injection.

Explanation: By investment we make more money than the face value,

By saving we reduce the value of investment....Saving is usually done to buy something where as investment is clearly to earn more