Question: An increase in saving and decrease in consumption may lower total spending in the economy. However, how could that happen if the increased saving lowers

An increase in saving and decrease in consumption may lower total spending in the economy. However, how could that happen if the increased saving lowers interest rates? Would not a decrease in interest rates increase investment spending, thus counterscting the decrease in consumption spending? Please give answer with description and references

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

According to Keynes, an increase in saving and 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...

1.10 According to Keynes, an increase in saving and decrease in consumption may lower total spending in the economy. But how could this happen if the increased saving lowers interest rates (as shown...

multiple choice Questions Question 2. 2. Commodities that typically last three years or more are called ________. durable goods nondurable goods services None of these answers is correct. Question 3....

Imagine the fictional country of Zarcania with a population of 5 million people. In 2021, the following happened: Businesses built $15 billion worth of new factories. e The government increased...

1. The main goal of macroeconomic is to: A. analyze current macroeconomic data. B. predict how the macroeconomy will perform in the future. C. make general statements about how the economy works. D....

Suppose government spending rises in Boversia, shifting the AE curve outward. The central bank would like to keep both output and the real exchange rate constant. How can policymakers accomplish...

1.Suppose government spending rises in Boversia, shifting the AE curve outward. The central bank would like to keep both output and the real exchange rate constant. How can policymakers accomplish...

Read the article below and answer the following questions ONTARIO GOVERNMENT PLANS TO BALANCE BUDGET IN FIVE YEARS, WITH DEFICIT NOW AT $11.7-BILLION The globe and mail APRIL 11, 2019 Ontario's...

Macy's, Inc.2018 As of March 2018, Macy's, Inc. operates 690 department stores in 45 states, Washington DC, and outside the United States in Columbia, Guam, Puerto Rico, China, United Arab Emirates,...

Daniel purchased Amazon shares in August 2022 at a price of $140 per share, but the value dropped to $103.6 per share by mid-May 2023 due to the volatile nature of the stock market. As a result,...

ANALYSIS OF LIQUIDITY Based on the comparative income statement and balance sheet of Ace Kitchen Works, Inc., that follow, compute the following liquidity measures for 20-2 (round all calculations to...

Save and close the table after updating the properties. Import data from Excel into the Fleet table. a . Launch the Get External Data - Excel Spreadsheet dialog box. b . Locate and select the...

Which component of the SCARF theory of motivation most directly addresses mitigating the management waste of micromanaging?

3. How can we use information and communication to generate trust?

4. How can we use information and communication to influence other people?

2. Why do we have more confidence in what one person tells us than in what another person tells us?