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When AS is greater than AD, savings will be greater than investment and economic activity will _________..

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User Eold
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1 Answer

2 votes

Answer:

The correct answer is: decrease.

Step-by-step explanation:

If Aggregate Supply (AS) is higher than Aggregate Demand (AD), it implies somehow consumers are keeping their income with them. Economic activity will contract as a result but to promote consumption, for instance, banks lower their interest rates on loans with the confidence that consumers will have enough money to cover their debts.

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User Sami Samhuri
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