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1. The population of Japan is ageing quickly and the old, who spent a relatively small proportion of their income, are being replaced by the

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1. The population of Japan is ageing quickly and the old, who spent a relatively small proportion of their income, are being replaced by the young who spend a relatively larger proportion of each new dollar of income. Older citizens also have different fixed consumption expenditures than in their younger days. Illustrate on a graph of planned expenditures how various changes in the components of consumption behavior of Japanese consumers can/will affect equilibrium output. Explain why the graph changes if consumption changes, and illustrate the effect on equilibrium output. Would it be possible for young Japanese to both spend a larger proportion of each new dollar of income and still save in the same proportions as their elders? Explain

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