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What are the critical assumptions that lead to the paradox of thrift (POT)? Use the I=S relationship to explain the POT “intuitively.”

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What are the critical assumptions that lead to the paradox of thrift (POT)? Use the I=S relationship to explain the POT “intuitively.”

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