GENERAL KNOWLEDGE

Detailed explanation-1: -The correct answer is remain constant. National income is the final value of goods and services produced and expressed in terms of money at current prices. Savings are not part of GDP or Income. Hence, If saving exceeds investment, the National Income will remain constant.

Detailed explanation-2: -A fundamental macroeconomic accounting identity is that saving equals investment. By definition, saving is income minus spending. Investment refers to physical investment, not financial investment. That saving equals investment follows from the national income equals national product identity.

Detailed explanation-3: -An increase in investment raises aggregate demand. National income and employment will rise until equilibrium is restored, i.e. where savings = investment. A decrease in investment has the opposite effect. However, national income will change by more than the change in investment.

Detailed explanation-4: -When planned savings is more than planned investment, then the planned inventory would fall below the desired level. To bring back the Inventory at the desired level, the producers expand the output. More output means more income.