THE ECONOMIC JOURNAL [MARCH of total output in period 1, but to prospective increases in subse quent periods. This objection may be divided into two parts (a)In view of the fact that much of the outlay of capital is con nected with long-range planning, it may be held that the funda mental equation gives too much weight to the short-period effect of the acceleration principle. This objection is freely admitted nd allowed for in the subsequent modification of the equation (b)It may further be objected that even in the sphere in which the acceleration principle holds there must be some lag between the increased provision of equipment(and stocks )and the increased flow of output which they are designed to support There may be some force in this. But the point is deliberately neglected in this part of the argument, along with all questions of lags. The study of these lags is of undoubted importance, but a division of labour in analysis is indispensable, and in this case the neglect is necessary in order to get the clearest possible view of the forces determining the trend and its infuence as such. More over, the lag referred to in this sub-heading(b)may properly be regarded as unimportant, since, in the event of a steady advance (G) being maintained, the difference between M -o and a2-a1 ill be of the second order of small quantities. In other words it matters not whether we regard the increment of capital as required to support the increment of total output in the same period or in the one immediately succeeding it 8. (ii)In the demonstration given above (paras. 6 and 7) reference was made to the distinction between the ex post and the ea ante increase of capital goods. No reference was made to the distinction between ex post and eac ante saving. Suppose that G is not equal to G, might not the discrepancy show itself on the other side of the equation, not in any divergence of Cp from C, but in ea post saving not being equal to ea ante saving I have no very clear view as to possible causes likely to operate in a systematic way to distort ex post from ea ante saving, or of the probable importance of such distortions. It is said, for instance that in a time of rising prices, fixed-income classes will not adapt cheir modes of life simultaneously, and so may save less than they would be disposed to do had they clearly foreseen the impending own rise of income, and so spend less than they would have been 1 Be it noted that ex ante is here used of defined in the expression ex ante investment it is the saving whi choose to make in any period, were they able to adapt expenditure simultaneously with the changing circumstances of the period