Adjustment Mechanism when planned investment is greater than planned savings:
(i) When planned (ex-ante) saving is more than planned investment. Suppose firms plan to invest ₹20,000 crores but households plan to save ₹25,000 crores, it shows consumption expenditure has decreased. Consequently, AD falls short of AS. Due to excess supply there will be stock piling of unsold goods, i.e., unintended unplanned inventories will accumulate. At this, the producers will cut down employment and produce less. National income will fall and as a result planned saving will start falling until it comes equal to planned investment. It is at this point equilibrium level of income is determined.

(ii) When planned (ex-ante) saving is less than planned investment. Suppose producers plan to invest ₹20,000 crores but households plan to save ₹ 15,000 crores, then AD (or consumption expenditure) is more than AS. Production will have to be increased to meet the excess demand. Consequently national income will increase leading to rise in saving until saving becomes equal to investment. It is here that equilibrium level of income is established because what the savers intend to save becomes equal to what the investors intend to invest. Sum and substances is that if planned saving and planned investment are equal, then output, income, employment and price level will be constant.