If the GDP of an economy is Rs.100 and the autonomous aggregate investment and ex-post aggregate saving are Rs.30 in equilibrium, what would be the aggregate saving in equilibrium in that economy if aggregate investment remains at Rs.30 and the average saving propensity increases from 30% to 40%?
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Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.
This question is on The paradox of thrift, part of Keynesian cross and the multiplier in Macroeconomics.
Why an attempt to save more can leave total saving unchanged or lower income.
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Question from the CUET-PG 2024 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.