INTRODUCTION TO ECONOMICS II (İKTİSADA GİRİŞ II) - (İNGİLİZCE) Dersi Equilibrium in the Economy soru detayı:

PAYLAŞ:

SORU:

Please discuss the relationship between Keynesian equilibrium, savings and investment.


CEVAP:

According to Keynesian model, one reason why equilibrium income is not always at full
employment level is that investment and saving equality cannot always be provided as Classics argue. The reason for this is that the economic units that save and invest in the economy are generally different from each other. These economic units give savings and investment decisions for different reasons. For example, when savings for households occur as accumulation for future days, firms’ investment decisions are directed at expanding facilities or purchasing new capital goods to increase their profitability. In this case, it may not happen that savings at an income level that close to full employment equal investments. Savings can also lead to an increase in the amount of money held, rather than being used for financing investments. In this case, savings-investment equality will not be provided again.