JNU SSS 2016 Question 56: Keynesian cross and the multiplier

“It is true, that, when an individual saves he increases his own wealth. But the conclusion that he also increases aggregate wealth fails to allow for the possibility that an act of individual saving may react on someone else's savings and hence on someone else's wealth.... For although the amount of his own saving is unlikely to have any significant influence on his own income, the reactions of the amount of his consumption on the incomes of others makes it impossible for all individuals simultaneously to save any given sums. Every such attempt to save more by reducing consumption will so affect incomes that the attempt necessarily defeats itself. It is, of course, just as impossible for the community as a whole to save less than the amount of current investment, since the attempt to do so will necessarily raise incomes to a level at which the sums which individuals choose to save add up to a figure exactly equal to the amount of investment.” (J. M. Keynes) On the basis of the above passage, answer the following questions : (a) What happens when the community as a whole decides to save less than the current investment? (b) Can all individuals end up with a higher aggregate saving by deciding simultaneously to consume less and save more?