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Aggregate Demand, Consumption & Saving · Question 59 of 60

Question 59

HardOriginal question

Planned saving is ₹120 crore and planned investment is ₹100 crore. What happens to firms' inventories?

Options for question 59

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. Households spend ₹20 crore less than firms expected, so ₹20 crore of output is unsold.

  2. Unsold goods are unplanned inventory investment, so actual investment = 100 + 20 = 120 = saving.

Concept
Unplanned inventories
Typical time
100 s
Your time
—
The rule this testsPlanned investment; ex ante and ex post
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Ten questions from Aggregate Demand, Consumption & Saving, at your own pace.

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