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Sagot :
As a result, the growth rate of the velocity of money falls and the aggregate demand curve shifts to the left.
What occurs when the savings rate rises?
A higher steady-state capital stock and level of output do follow from a higher saving rate. The growth rate briefly increases as production changes from a lower to a higher steady-state level. in some more recent growth theories.
Why does the curve for aggregate demand slope downward?
The total of consumption, investment, government purchases, and net exports at each price level in every period is represented by the aggregate demand curve. Due to the wealth effect on consumption, the interest rate effect on investment, and the impact of global commerce on net exports, it slopes downward.
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