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    Question

    Which of the following situations will happen if savings

    exceed investment in any country at any time?
    A National income rises Correct Answer Incorrect Answer
    B National income falls Correct Answer Incorrect Answer
    C National income is not affected Correct Answer Incorrect Answer
    D National Income will be equal to GDP Correct Answer Incorrect Answer
    E None of the Above Correct Answer Incorrect Answer

    Solution

    When you increase your saving, the national income falls rather than rise. The demand deposits in banks will increase the national income because it is considered as investments. The deposits you keep in banks are actually used for investment by the banks.

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