Question

When the planned flow of goods and services in the economy is less than their planned demand : 1) AS = AD 2)AS > AD 3) AS < AD 4)None of these ​

Answer 1

Answer:

Behavioral equations or functions. These tell us what people would like to do, and how they would like to behave (whether they actually do manage to achieve their desired behavior met depends on the economy, and so we cannot assume that behavioral equations are true at all times).

Equilibrium equations tell us what relationship must exist if everybody is to manage to satisfy their desires (as described in the behavioral equations) at the same time. But while an equilibrium equation or condition can tell me what has to happen if everybody is to be able to meet their desired behavior simultaneously, I do not have any guarantee that the economy is actually at that position! Thus the equilibrium equation is only true for those situations when everybody actually does manage to satisfy their desired behavior. In such a situation, there is no tendency for things to change (since everybody manages to meet their desired behavior, and so no one finds that they cannot meet their decisions and tries to change things)--which is why it is called an equilibrium.

Explanation: