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There's no loss in aggregate demand from savings and investment...investment is still spent, just on factories and equipment and research instead of consumer go
by OstiaAntica 15y ago
There's no loss in aggregate demand from savings and investment...investment is still spent, just on factories and equipment and research instead of consumer goods.
- nhaehnle 15y agoIt seems to me that you are implicitly assuming that savings always equal investments. This is not true. Savings minus investments is the private sector balance, which has varied wildly, see e.g. the graph here: http://pragcap.com/sectoral-balances-and-the-united-states http://pragcap.com/sectoral-balances-and-the-united-states