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Suppose That an Economy Is Operating at Equilibrium and for Some

question 17

Essay

Suppose that an economy is operating at equilibrium and for some reason households begin to save a smaller fraction of their income (the marginal propensity to save falls). How will this affect equilibrium output in the future when planned investment rises and falls?


Definitions:

Hyperpnea

Abnormally deep, rapid breathing.

Eupnea

Normal, unlabored breathing pattern.

Sphygmomanometers

Instruments used to measure blood pressure, typically consisting of a cuff, gauge, and a mechanism for inflation.

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