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E. Households significantly reduce their spending and start saving a larger portion of their income, leading to a decrease in interest rates. Hint: Think about
E. Households significantly reduce their spending and start saving a larger portion of their income, leading to a decrease in interest rates. Hint: Think about another sector of the economy and how it might respond to lower interest rates and what effect this will have on the model. {3 points} AD shifts left because demand decreases and AS shifts to the left because household money is being saved
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