Is Saving Bad for the Economy

Running head: IS SAVING BAD FOR THE ECONOMY University of Phoenix Effect of nest egg on Economy This paper is an analysis of the article Is Saving blighted for the Economy? by Frank Shostak. It will discuss the orotund escape of goods and services as well as repeat the articles main point. As stated in the tidings Economics by David Colander, the economy is a circular issue in which output and input are interrelated. This relates to the article at hand clearly and somehow it goes along side by side with what Shostak had discussed in his article. The article discusses the concern of the Feds heart-to-heart Market Committee in year 2001 that consumers competency march on their savings thereby weakening the economic expansion. Shostak goes further by stating that savings could be detrimental to the economy as it weakens the submit for goods and services. He also describes the how is the economy is a circular flow of m peerlessy by giving several examples. He states that what one soul spends is consider as earnings for another. Shostak also asserts on the consumers confidence in the role of saving. He describes how a person not confident with the future will cut back end on spending or hoard more cash.

To treat this issue, he exclaims that some people think that the central bank should put more specie in peoples workforce to elevate their confidence and therefore the circular flow of money will reassert itself. Shostak asserts that this approach is bad because every exertion has to be funded, it follows that an increase in consumption that is not back up by production must divert funding from wealth-generating activities. This, in turn, diminishes the flow of real savings to the producers of wealth, which weakens the flow of production, which sets in doubtfulness an economic recession. He adds that what impedes the economic prosperity is the scarcity of demand. He mentions that the people have unlimited demands and that a problem might arise with the means to accommodate that demand. He... If you want to get a full essay, order it on our website: Orderessay

If you want to get a full essay, wisit our page: write my essay .