Question

When planned saving is less than planned investment, it indicates a situation when:

• A. AD < AS
• B. AD = AS
• C. AD > AS
• D. None of these

Answer 1

The correct option is A AD < AS

When planned savings is less than the planned investment , then the planned inventory rises above the desired level which denotes that the consumption is the economy was less then the expected level which indicates at less aggregate demand in comparison to aggregate supply.