Chapter 24 Problems Macro.docx - Jillian Franko Chapter 24...

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Jillian FrankoChapter 24 Problems4. Saving is what is left over after taking into consideration the cost of a person's expenses and subtracting themfrom the amount of income that he or she earns in a certain time period. An investment is the buying of goods today that are not consumed immediately but are used in the future. Although the economy of Newt was running a balanced budget in 2013, by saving more than they are investing, they are likely to reduce aggregate output. By saving more, people consume less and therefore, producers will produce less. This ultimately leads to a decrease in the aggregate. If the government were running a deficit and saving were equal to investment, they government would likely remain in a deficit. If, however, the government decides to increase both government purchases and taxes, they could increase the output (income).
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Term
Fall
Professor
Mr. Kemmerer
Tags
Macroeconomics, Keynesian economics, Jillian Franko

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