Read the following report and answer the questions that follow:Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the ________________ in the economy.a)Aggregate demandb)Aggregate supplyc)Investmentd)None of the aboveCorrect answer is option 'A'. Can you explain this answer?

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Read the following report and answer the questions that follow:

Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.

It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the ________________ in the economy.

a)
Aggregate demand
b)
Aggregate supply
c)
Investment
d)
None of the above

Correct answer is option 'A'. Can you explain this answer?

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Read the following report and answer the questions that follow:Due t...

Aggregate demand represents the total demand for goods and services at any given price level in a given period. Aggregate demand consists of all consumer goods, capital goods (factories and equipment), exports, imports, and government spending programs.

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Read the following report and answer the questions that follow:Due t...

Fall in Private Consumption, Private Investment, and Ex-ante Savings

Introduction

In the given report, it is stated that due to the Covid-19 situation, there has been a fall in the savings of the people, leading to a decrease in private consumption expenditure, private investment expenditure, and ex-ante savings. This reduction in these factors has had an impact on the overall demand in the economy. Let's analyze this situation in detail.

1. Impact on Aggregate Demand

The report mentions that the reduction in private consumption expenditure, private investment expenditure, and ex-ante savings has led to a decrease in aggregate demand in the economy. Aggregate demand refers to the total demand for goods and services in an economy at a given time. It is the sum of consumption expenditure, investment expenditure, government expenditure, and net exports.

2. Private Consumption Expenditure

Private consumption expenditure is the spending done by individuals and households on goods and services. Due to the Covid-19 situation, people have experienced a fall in their savings, which has led to a decrease in their ability to spend on consumption. This decrease in private consumption expenditure has a direct impact on aggregate demand as it contributes a significant portion to it.

3. Private Investment Expenditure

Private investment expenditure refers to the spending done by businesses and companies on capital goods, such as machinery, equipment, and infrastructure. The report mentions that the reduction in savings has also led to a decrease in private investment expenditure. This decrease in investment expenditure further contributes to the decline in aggregate demand.

4. Ex-ante Savings

Ex-ante savings refer to the planned savings of individuals and households. It represents the portion of income that is not spent on consumption. In the given report, it is stated that the desired or required ex-ante savings for the functioning of the economy have reduced. This implies that individuals and households are saving less than what is necessary for the smooth functioning of the economy. The decrease in ex-ante savings has a negative impact on aggregate demand.

Conclusion

In conclusion, the reduction in private consumption expenditure, private investment expenditure, and ex-ante savings has resulted in a decrease in aggregate demand in the economy. This decrease is due to the fall in savings caused by the Covid-19 situation. To address this situation, the government has announced stimulus packages to revive the economy and generate employment through infrastructure projects. By stimulating consumption and investment, the government aims to increase aggregate demand and restore economic growth.

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Read the following report and answer the questions that follow:Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.Due to the Covid-19 situation what has happened

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Read the report given below and answer the questions that follow:In an economy the Aggregate Demand is determined by consumption, Government Expenditure and Net Exports in the economy. This is affected by the Savings and Investment in the economy. The Multiplier, that is investment multiplier, which is influenced by the ratio of total consumption and total income, regulates the flow of money in the economy influencing the Aggregate Demand and Supply. Any change in any of the factors leads to a big change in the economy’s equilibrium as a whole. It is to be kept in mind that the economy needs to be in equilibrium condition. When savings is less than the investments the aggregate demand is more than the aggregate supply, and vice versa.Savings and Investment affect the ________.

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Read the following report and answer the questions that follow:Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the ________________ in the economy.a)Aggregate demandb)Aggregate supplyc)Investmentd)None of the aboveCorrect answer is option 'A'. Can you explain this answer?

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