Any change in the economy that reduces desired national saving for a given value of the real interest rate will shift the desired national saving curve to

Question

Quizplus · Accepted Answer

A decrease in desired national saving, for a given real interest rate, shifts the desired national saving curve to the left. This shift implies that at any given interest rate, there is less saving available. To balance the decreased supply of savings with demand for investment, the real interest rate must increase to equilibrate the market.

Any Change in the Economy That Reduces Desired National Saving