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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Suppose Americans decide to save more of their in-comes. If banks lend this extra saving to businesses, which use the funds to build new factories, how might this lead to faster growth in productivity? Who do you suppose benefits from the higher productivity? Is society getting a free lunch?

To determine

Growth in productivity.

Explanation

If the Americans decided to save more and the banks lend extra savings to business (which are used to spend for new factories), then there will be an increase in the production and productivity. The productivity means high efficiency production...

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