10 The Keynesian model suggests that an increase in planned aggregate saving could cause problems. Higher planned...

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10 The Keynesian model suggests that an increase in planned aggregate saving could cause problems. Higher planned saving would mean a reduction in planned consump- tion. Other things constant, aggregate demand would decline, causing the equilibrium level of income to fall. Since households often try to save more at the beginning of a re- cessionary period, their actions may push the economy further into a recession and com- plicate the recovery process.

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Essentials Of Economics

ISBN: 396414

2nd Edition

Authors: James D Gwartney; Richard Stroup; J R Clark

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