Saving Curve - profits could be received elsewhere,...

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Saving Curve The saving curve shows the relationship between aggregate saving and the real interest rate. shifts of saving curve age profile of population economic growth current income expected future income and wealth precautionary saving bequests Investment and Borrowing Decisions by Firms Household savings may be used by (1) domestic businesses, (2) domestic governments, and (3) foreign households, firms, and governments. Businesses invest in new capital goods in order to earn the greatest possible profits. If higher
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Unformatted text preview: profits could be received elsewhere, businesses will not invest in new capital. determinants of desired total investment 1. expected profitability of capital 2. expected real interest rate 3. Investment Curve The investment curve shows the relationship between total investment and the expected real interest rate. shifts of investment curve • expected profitability of capital • corporate tax on profits • tax subsidies for investment Equilibrium...
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This note was uploaded on 11/22/2011 for the course FIN FIN1100 taught by Professor Bradrifkin during the Fall '09 term at Broward College.

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Saving Curve - profits could be received elsewhere,...

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