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प्रश्न
What will happen to the level of circular flow of income in the following situation?
S > I
लघु उत्तरीय
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उत्तर
When Savings (S) > Investment (I) in an economy, it leads to a decline in the level of circular flow of income. Here's why:
- More income is being withdrawn from the economy (as savings) than is being injected back (as investment).
- This reduces overall demand for goods and services.
- Firms may respond by reducing production, leading to lower income and employment.
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