Explain how does this shift affect investment interest rate

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The government raises taxes by $100 billion. If the marginal propensity to consume is 0.7, what happens public saving? Private saving? National saving? Investment?

Suppose that an increase in consumer confidence raises consumers" expectations of future income and thus the amount that they want to consume today. This might be interpreted as an upward shift in the consumption function. How does this shift affect investment and the interest rate?

Reference no: EM1359112

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