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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Explain how higher saving leads to a higher standard of living. What might deter a policymaker from trying to raise the rate of saving?

To determine

Rate ofsaving and its effect on the standard of living.

Explanation

Higher saving implies fewer resources are needed to make more consumption goods to produce capital goods. As a result, there is a rise in the capital stock leading to an increase in productivity and thereby, more rapid growth in GDP for a while. The standard of living depends on the GDP and hence in the long...

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