Answer to Question #22559 in Macroeconomics for dip

Question

Using the simple Keynesian (J-W) model to assess the implications for equilibrium GDP and the level of savings of an increase in the savings function. What happens to the level of savings? What would happen to equilibrium income if there is a sustained rise in private investment spending?

Answer 1

= Consumption decrease C↓A: Pay off debt = Savings increase S↑, Consumption decrease C↓. Not spending= Consumption decrease C↓.A: Pay off debt = Savings increase S↑, Consumption decrease C↓. Not spending= Consumption decrease C↓..Using the simple Keynesian model to assess the implications for equilibrium GDP and the level of savings of an increase in the savings function, we can say, that Paying off debt = savings increase and Consumption decrease.