1.How does private savings impact investment? Why is it important for individuals to save in an economy? How do public policies such as tax policies affect savings rates? How do government budget deficits affect interest rates?
Private saving impacts investment because it is a good investment of your money if you can make intrust on it. It is important for individuals to save in an economy because the banks use the money in a way that benefits both savers and big spenders. Big savers get intrust on the money they save, while big spenders can spend money they dont have. Public policies do not have a huge impact on saving rates. However if taxes were not as high, people would be able to save more.
2.The US is running record budget deficits. Define crowding out. Look for an article talking about it. Do you think it’s a problem? Why or why not?
Crowding out is when the government gets to the financial market first and they use up all of the savings, this means there will be less money for citizens to borrow. I do not think that crowding out is a problem because in the U.S. there will always be money for people to borrow if they want to. in other words the government is borrowing a-lot of money but it isn’t too much money to pay back.
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