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This chapter argues that saving and spending behavior depend in part on wealth (accumulated savings and...

This chapter argues that saving and spending behavior depend in part on wealth (accumulated savings and inheritance), but our simple model does not incorporate this effect. Consider the following model of a simple economy: C = 50 + 0.8Y + 0.1W I= 200 W=500 Y= C + I S = Y−C When wealth = 500, what is GDP When wealth = 500, what is consumption When wealth = 500, what is savings

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