A simple
Keynesian model follows four principles:
1. Accumulated
expenditures, income, and output are the same.
2. All input of spending into the economy must equal
all withdrawals
3. Investment is an input.
4. Saving is a withdrawal
According to Keynesian analysis, of households intend to save more, they
will become poorer. The theory about Keynesian analysis applies to
economic where an increase in savings decreases the circular flow of income. S
when the households save more, they are reducing the stream of income for other
households and therefor diminishes the overall economic activity.
