When planned savings are more than planned investment, firms will then_

CA Foundation · Business Economics · MTP · September 2026
When planned savings are more than planned investment, firms will then_
(A) A. reduce production until the economy returns to equilibrium
(B) B. Increase production until the economy returns to equilibrium.
(C) C. produce same quantity
(D) D. none of the above

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. reduce production until the economy returns to equilibrium

Topics: Determination of National Income

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