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5) Why is GDP not maintainable if actual investment is greater than planned investment?

5) Why is GDP not maintainable if actual investment is greater than planned investment?
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Answer #1

Actual investments are those investments which are happend in the year and planned investment can be considered as the total investments which are planned to made during the year. So if the actual investment is is higher than the planned investment then the inventory value will be higher. This will leads to capital appreciation because inventories are related with the capital. So this will leads to reduction in the output and so the economic value will change. The total output will get reduced. In this situation the GDP of the country will be fluctuate and we can not maintain our GDP due to lower output. This is why GDP is not maintainable when the actual investment is greater than the planned investment.

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