Ex-ante investment refers to the desired investment or planned investment during the period of one year. This is the investment expenditure which is intended to be made in the economy during the period of one year. Ex-post investment refers to the actual investment in the economy during the period of one year.

What is ex-ante saving and investment?

Ex-ante investment refers to the desired investment or planned investment during the period of one year. This is the investment expenditure which is intended to be made in the economy during the period of one year. Ex-post investment refers to the actual investment in the economy during the period of one year.

Why ex-ante saving and ex-ante investment are not always equal to each other?

Ex-ante saving and ex-ante investment are not always equal to each other. They are equal only at the equilibrium level. When ex-ante (planned) saving is not equal to ex-ante (planned) investment, then output will tend to adjust itself till both of them become equal again.

What is the difference between ex-ante and ex post investment?

Ex-ante investment refers to the investment that enterprises and planners in the economy wish to make at the start of a period. The actual or realized investment, on the other hand, Ex-post or actual investment is the measurement of a time (e.g., a year) after the fact, when more investment is required.

What happen when ex-ante saving exceed ex-ante investment?

Ex-Ante Investments are greater than Ex-Ante Savings: Thus, there will be unplanned depletion of inventory (or unplanned dis-investment). In response to this, to increase the stock of output, the producers plan to expand production in the next period; thereby increase the employment of factors of production.

What are ex-post saving and ex-post investment?

Ex-post saving refer to the actual or realised saving in an economy during a year. Ex-post or actual saving is the sum total of planned saving and unplanned saving. Ex-post investment refers to the realised or actual investment in an economy during a year.

What is ex-ante saving and full employment?

(a) Ex-ante saving: The saving which the firms or entrepreneur desire to maker in the economy during a period is called ex-ante (planned savings). (b) Full employment: It refers to the situation when all the workers who are willing and able to work at prevailing wage rate are actually employed.

Why ex-post saving and ex-post investment are always equal?

Ex-post or realised (or actual) saving and investment are necessarily equal and this is brought about by fluctuations in income. Since unplanned investment also gets included in realised investment, therefore, realised investment is always equal to realised saving.

Who introduced the term ex-ante and ex-post?

The terminology was introduced into macroeconomic theory, especially with regard to the savings-investment relation by Gunnar Myrdal (1933; 1939) and clarified and incorporated into sequence or period analysis by Erik Lindahl (1934; 1939b), whose conceptual system of ‘prospective’ and ‘retrospective’ values achieved ‘ …

What is paradox of thrift Class 12?

Paradox of thrift refers to a situation in which people tend to save more money, thereby leading to a fall in the savings of the economy as a whole. In other words, when everyone increases his/her saving-income proportion i.e. MPS (s), then, the aggregate demand will fall as consumption decreases.

What is meant by paradox of thrift?

The paradox of thrift is an economic theory that argues that personal savings can be detrimental to overall economic growth. It is based on a circular flow of the economy in which current spending drives future spending. It calls for a lowering of interest rates to boost spending levels during an economic recession.

What happens when planned saving exceeds planned investment?

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.

What is the difference between ex-ante saving and ex port saving?

Ex-ante savings refers to the desired savings or planned savings during the period of one year. This is the savings which is intended to be made in the economy during the period of one year. Ex-post savings refers to the actual savings in the economy from the given level of income during the period of one year.