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Principles of Macroeconomics / Unit 2   MAC 0133 short lesson, about 20 seconds

What Shifts Saving and Borrowing

Captions available

The idea

Supply shifts with saving decisions, income and the return available elsewhere. Demand shifts with confidence about future returns and the ability to repay.

In practice

A collapse in business confidence shifts the demand for funds left.

Where people slip

Foreign savers are part of domestic supply, so a loss of their confidence shifts supply left and raises the rate.

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