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Economics and the 2008 crisis: a Keynesian view
Economics and the 2008 crisis: a Keynesian view

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4.2 Modelling planned saving (2)

If we now show our consumption function on the same diagram, we can visually compare each level of income with its corresponding level of planned consumption.

Activity 6

Recalling that planned saving is the difference between income and planned consumption, click on two points on the diagram which, when joined up, will show the amount of planned saving at an income level of £600.

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Figure 8 The 45-degree line and the consumption function
Interactive feature not available in single page view (see it in standard view).