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assume households attempt to increase savings by reducing autonomous consumption. using the keynesian cross diagram, illustrate...

assume households attempt to increase savings by reducing autonomous consumption. using the keynesian cross diagram, illustrate the effect of lower autonomous consumption on equilibrium output
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A decrease in the consumption and an increase in the savings will shift the AE curve downwards and the economy will reach an equilibrium at a earlier point . This will reduce the output in the economy and increase the Unemployment. Here, in the graph the previous economy was at point B and the new equilibrium will be at A that is at a lower level.

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