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Consider the impact of an increase in thriftness in the Keynesian model. Suppose the consuption is as follows; C=C+c(Y-T) Where C is a parameter called
Consider the impact of an increase in thriftness in the Keynesian model. Suppose the consuption is as follows;
C=C+c(Y-T)
Where C is a parameter called autonomous consumption and C is the marginal prosperity to consume.
Explain what happens to equilibrium income when the economy becomes more thrifty. Include in your answer two possible reasons why consumers would become more thrifty.
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