Examine the effects of each of the given on national saving

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Analyze the effects of each of the following on national saving, investment, and the real interest rate. Explain your reasoning and illustrate it with an appropriate diagram.

(a) Consumer confidence falls, so consumers decide to consume less and save more at every level of the real interest rate.

(b) The government announces a larger, one-time bones payment to veterans returning from a war. The bonus will be financed by additional taxes levied on the general population over the next five years.

(c) The government introduces an investment tax credit (offset by other types of taxes, so total tax collections remain unchanged)

(d) A new technology breakthrough increases the future marginal product of capital and expected future income.

Reference no: EM13456181

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