Question

If S > I, it will lead to ______.

Options

• Excess demand

• Deficient demand

• Notional demand

• Actual demand

Answer 1

If S > I, it will lead to deficient demand.

Explanation:

In economic terms, "S" often represents savings, while "I" represents investment. If savings exceed investment (S > I), it often suggests that not all savings are being used for investment, which may result in a buildup of unsold products and services, implying a lack of aggregate demand. This circumstance is generally connected with AS, which means that Aggregate Supply is greater than aggregate Demand.