JNU 2003

[Anjali]

Between 2 periods in a closed economy everybody's propensity to save doubles , while investment remains unchanged . As a result
Saving doubles
Income doubles
Savings remain unchanged
Income remains unchanged

[vandita24x7]

Savings unchanged

vandita

On 25 Mar 2014 20:43, "Anjali [via Discussion forum]" <[hidden email]> wrote:

Between 2 periods in a closed economy everybody's propensity to save doubles , while investment remains unchanged . As a result
Saving doubles
Income doubles
Savings remain unchanged
Income remains unchanged

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NAML

[Anjali]

Why not income unchanged ? You mean that even if savings are increasing , due to stagnant investment , output is declining. So change in savings will offset the change in income ? Is that so ?

[vandita24x7]

Closed economy.. have to maintain S=I . So since no option on investment.. and Propensity to save doubles so to keep investment same as savings income actually becomes half

vandita

On 25 Mar 2014 21:06, "Anjali [via Discussion forum]" <[hidden email]> wrote:

Why not income unchanged ? You mean that even if savings are increasing , due to stagnant investment , output is declining. So change in savings will offset the change in income ? Is that so ?

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NAML

[RajEco]

income might or might not change. It may increase due to increase in autonomous consumption.

[Anjali]

Great ! Thanks