MeloWuzzHere8731 MeloWuzzHere8731
  • 03-01-2020
  • Business
contestada

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

Respuesta :

BenitoMarin BenitoMarin
  • 04-01-2020

Answer:

The correct answer is: decrease.

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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