What might deter a policymaker from trying to raise the rate of saving?

Q: How does a decrease in the tax rate on income earned on saving affect saving, investment, the…

A: In an economy, government taxes will have a significant impact on households consumption and savings…

Q: If saving dropped sharply in the economy, what would likely happen to investment? Why?

A: The savings and investment are two important factors that are determined based on the rate of…

Q: Does the amount of government spending in an economy respond directly to changes in aggregate…

A: The instruments of fiscal policy are government taxation and spending. To accomplish different…

Q: Suppose people can consume the income they earn or save and invest it at rate ?. If we tax wealth…

A: Wealth is the total value of all the assets tha owned by a person. It includes physical and…

Q: How does minimizing business or personal debt help prevent bankruptcies in a recession?

A: Business and personal debt refers to the borrowing by the people to do business or personal…

Q: How distortions affect the market of tradable and non-tradable goods and how it affects the…

A: the Market of tradeable goods refers to the industries whose goods are traded in international…

Q: why increasing government expenditure causes interest rate to rise?

A: Government expenditure is the expenditure by the government to the national economy. Example of the…

Q: Is it possible for total saving to fall when people become more thirfty?

A: Answer: The paradox of Thrift was introduced by J.M.Keynes, this theory explains when individuals…

Q: Chicago economists think that leakage in the circular flow model does not exist. If this is the…

A: There are four major sectors in the economy i.e. households, firms, factor market and goods and…

Q: ay

A: The theory that shows how an individual seeks to smoothen his or her consumption over their lifetime…

Q: Explain how changes in interest rates and rates of return on various investment options will affect…

A: Explain how changes in interest rates and rates of return on various investment options will affect…

Q: What is the impact of a change in the savings rate on the output?

A: When savings rate increases (decreases), people increase (decrease) current saving and decrease…

Q: Explain what happens to savings, investment and the real interest rate in an economy if the…

A: Government expenditure is basically the amount of money that is spent by the government on…

Q: Briefly explain the role played by banks between savers and borrowers and how the economy benefits…

A: Banks are financial institutions that accept deposits from savers and lend out funds to borrowers.…

Q: explain the quotation. “Do not save what is left after spending, but spend what is left after…

A: The quote “Do not save what is left after spending, but spend what is left after saving.” is one of…

Q: What was the maximum change in GSP from the tax cut

A: GSP represents Generalized System of Preferences. It is a trade policy instrument utilized by…

Q: In Classical theory, Saving may increase due to decrease in Interest Rate

A: Classical economists tend to maintain that the economy is always capable to achieve the natural…

Q: Why is investment spending unstable?

A: The investment is the process of spending the money for making more returns from the fir or process…

Q: Why do rich people have a higher marginal propensity to save than poor people?

A: In economics, the term marginal propensity to save (MPS) depicts the proportion of aggregate raise…

Q: Explain, why is reducing the interest rate not necessarily enough to stimulate investment spending?

A: The money used by firms and businesses to buy capital equipments and tools to increase production…

Q: The Economist article, "Low interest rates leave savers with few good options", states that savers…

A: Poeple save money for different reasons. Savings allow people to meet future expenses. Setting cash…

Q: If net personal taxes rise, what happens to private saving ? Public saving ?

A: In an economy, taxes refers to the expenditure by the people and revenue of the government because…

Q: Please explain the impact of a change in the savings rate on the output

A: - In an economy, the individuals or groups either save or consume from their income. Savings and…

Q: Is savings harmful or beneficial to the economy? Contrast the two views on this issue.

A: The impact of saving on economic growth has been a point of argument. One group argues that savings…

Q: people tend to spend more money when the economy experience a

A: The overall condition of the economy as it progresses through four stages in a cyclical manner is…

Q: Briefly explain how an increase in interest rates affects consumer spending. investment spending,…

A: The increase in interest rates is a monetary policy instrument implemented by the central bank. It…

Q: nt spending

A: By setting the federal funds rate, the Fed adjusts long-term interest rates indirectly, which leads…

Q: The interest rate effect states that a lower price level reduces the amount of money people wish to…

A: The interest rate effect is the change in the spending and borrowings after the change in interest…

Q: When making choices between spending or saving, how might these decisions impact the aggregate…

A: Introduction Income to a consumer is divided between spending and saving. From a personal point of…

Q: In the Savings-Investment model, what is the effect of an increase in government spending on…

A: Saving – investment diagram represents if one parameter of this model changes how investment…

Q: Using a graph representing the market for loanable funds, show and explain what happens to interest…

A: In the loanable funds theory, the supply and demand of loanable funds determine the equilibrium…

Q: Differentiate between Classical and Keynesian Economists approach to savings.

A: The money that is left by a consumer after subtraction of consumer spending from their disposable…

Q: How does shadow economy affect GDP?

A: The shadow economy is the economic activity that is not declared activates and for which taxes…

Q: What do you expect will happen to investment demand in this country?

A: The markets of a nation are considered to be the integral part of the growth of the nation. The…

Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.