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According to Keynes, the dollar amount households plan to save

a. sometimes equals the dollar amount firms plan to invest.

b. is always greater than the dollar amount firms plan to invest.

c. is always less than the dollar amount firms plan to invest.

d. always equals the dollar amount firms plan to invest

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User Yang You
by
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1 Answer

4 votes

Final answer:

Keynesian economics suggests that household saving can sometimes match firm investment, but changes in preferences or economic conditions can alter this balance. Hence, the correct answer is option (a).

Step-by-step explanation:

According to Keynesian economics, the dollar amount households plan to save sometimes equals the dollar amount firms plan to invest. However, this is not a constant situation as various factors, including household preferences and the overall economic environment, can shift saving and investment behaviors.

For example, if households prefer to consume more rather than save, aggregate demand (AD) will shift to the right, which could lead to a divergence between saving and investment levels.

answered
User Propstm
by
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