Reduced Saving Motive When Wealth Exceeds Target Level
When an increase in asset values, such as a rise in house prices, causes a household's wealth to surpass its target level, the motivation to save for precautionary reasons decreases. This can lead the household to reduce its rate of saving and instead increase its spending on goods and services.
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Introduction to Macroeconomics Course
Ch.8 Economic dynamics: Financial and environmental crises - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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