Answer the Questions Below:
(A) Same Arpue That Japan's $\boldsymbol { S } /\boldsymbol { Y }$

question 135

Essay

Answer the questions below:
(A) Same arpue that Japan's sayng rate is tod high. Suppose all Japanese citizens decice to 5ave at a lower rate. Show what happens in this case in the saving and investument diagram where the $\boldsymbol { S } /\boldsymbol { Y }$ curve shifts.
(B) Naw show the same situation in the CY, $I/ Y$ , and $X /Y$ diagrams. Which curve shifts? If the guvernment share of GDP does not change, then what must happen to interest rates? Explain how this affects the faur shares.
(C) Suppose that when the Jepanese citizens began 5aring at a lower rate, the gavernment reduced its level of spending and the guvermment share of GDP fell. Illustrate the effect an the interest rate using the saving-investment appraach and the four-tliagram appranch in parts (A) and (B) What happens to the faur shares of GDP?

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Definitions:

Operating Leverage

A financial concept that measures the proportion of fixed costs in a company's cost structure, indicating its sensitivity to changes in sales volume.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Net Operating Income

A measure of the profitability of a business's core operational activities, excluding any income or expenses not directly related to its main operations.

Sales Volumes

The quantity of products or services sold by a company within a specific period.