Question : Inventory falls below the desired level when
Option 1: Savings is more than investment
Option 2: Savings is less than investment
Option 3: Savings is equal to investment
Option 4: None of the above
Answer (1)
23rd Jan, 2024
Correct Answer:
Savings is less than investment
Solution :
When savings is less than investment it means that households are consuming more as than expected to consume. As a result the inventory falls below the desired level.
Hence, Option B is correct.
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