the demand-creating effect and the capacity-generating effect of investment at any time t, under the actual growth rate of r. If r(the actual rate)exceeds ps (the required rate) then dy/dt>dx/dt, and the demand effect outstrip the capacity effect, causing a shortage of capacity. Conversely ifr< ps, there will be a deficiency in aggregate demand and hence, a surplus of capacity The curious thing about this conclusion is that if investment actually grows at a faster rate than required(r> ps) the end result will be a shortage rather than a surplus of capacity. It is equally curious that if the actual growth of investment lags behind the required rate (r< ps), we will encounter a capacity surplus rather than a shortage. Inde because of such paradoxical results, if we now allow the entrepreneurs to adjust the actual growth rate r(hithertothe demand-creating effect and the capacity-generating effect of investment at any time t, under the actual growth rate of r. If r (the actual rate) exceeds (the required rate), then , and the demand effect outstrip the capacity effect, causing a shortage of capacity. Conversely, if , there will be a deficiency in aggregate demand and, hence, a surplus of capacity. s dY dt  d dt r  s The curious thing about this conclusion is that if investment actually grows at a faster rate than required the end result will be a shortage rather than a surplus of capacity. It is equally curious that if the actual growth of investment lags behind the required rate , we will encounter a capacity surplus rather than a shortage. Indeed, because of such paradoxical results, if we now allow the entrepreneurs to adjust the actual growth rate r (hitherto(r  s), (r  s)