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Explain the relationship between consumption and saving in the Keynesian model.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Explain the relationship between consumption and saving in the Keynesian
model.

Expert Solution

Step 1

The total expenditure within the economy and its consequences on output, employment, and inflation is understood as the economic theory of social science. Keynes pushed for higher government outlay and lower taxes to stimulate demand and carry the global economy of this period supported his theory.

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