This will cause individuals to purchase more

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This will cause individuals to purchase more consumption goods and save/invest less. One additional way is from the median voter rule; only the swing voter matters. Voters can impose higher costs on wealthy individuals discouraging their investment and therefore growth. SAVING 1). True/False: “A country can achieve a higher long-term growth rate by increasing its savings rate.” This statement depends on which growth theory is used. If the Barro model is used, then the statement is true. In Barro’s model, if saving increases, consumption today decreases,
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growth rate today decreases, but the growth rate in the future will increase. Saving can be channeled to two different factors in this model. The first factor is physical or human capital which is already included in the Solow model. If all saving is channeled to physical or human capital, then you will get the Solow model exactly. But, research and development is another
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