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The Australian Bureau of Statistics (ABS) reports that the housing saving ratio in Australia increased notably during the pandemic. The following chart and table from
The Australian Bureau of Statistics (ABS) reports that the housing saving ratio in Australia increased notably during the pandemic. The following chart and table from the ABS illustrates how the fraction of income that households are allocate to saving jumped during the pandemic and has remained above pre-pandemic ratio.
Explain how this higher saving ratio would affect the size of the multiplier. In other words, would a higher saving rate strengthen or weaken the multiplier effect, and why?
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