Desired savings are kept equal to
desired investment by responses to interest rate
changes. Savings identity or the savings
investment identity is a concept in National
Income Accounting stating that the amount
saved (S) in an economy will be amount invested
(I). This identity only holds true because
investment here is defined as including
inventories. Thus, should consumers decide to
save more, and spend less, the fall in demand
would lead to an increase in business
inventories. The change in inventories brings
savings and investment into balance without any
intention by business to increase investment.