Question: 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
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?
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