Savings Behavior and Influencing Factors
By levying taxes the government receives revenue from the populace. Taxes come in many varieties and serve different specific purposes, but the key concept is that taxation is a transfer of assets from the people to the government. Finally, government can increase the interest rates above inflation, which will increase the money supply by increasing savings, but it will also push housing prices down and further burden the consumer which will slow economic growth and likely run the economy into a full-blown recession.
All in all, personal saving is used in times of an economic downturn to buffer the effects of loss of income and higher prices, but it is not taken on such a large scale as it is with government savings. But major changes in personal saving habits can also significantly influence government saving plans and states economic growth. What is more, government savings is very important and complex component of economics. Personal savings can bring positive impact on economic growth, as well as negative effects on the economy. Therefore government with their resources is trying to regulate personal savings.
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