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Macroeconomics 10th Edition by Roger Arnold
Edition 10ISBN: 978-1111823016Macroeconomics 10th Edition by Roger Arnold
Edition 10ISBN: 978-1111823016 Exercise 17
According to Keynes, an increase in saving and a decrease in consumption may lower total spending in the economy. But how could this happen if the increased saving lowers interest rates (as shown in the last chapter)? Wouldn't a decrease in interest rates increase investment spending, thus counteracting the decrease in consumption spending?
Explanation
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Let us assume a simple Keynesian model w...
Macroeconomics 10th Edition by Roger Arnold
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