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About Saving, Consumption, and Investment

The relation of saving, investment, and consumption is given in this short article. We can also find out the relationship of interest rate and saving, consumption, and investment. The relation of average propensity of consumption and investment to marginal propensity of consumption and investment is also provided. This article explains why higher interest rate leads to less consumption, larger saving, and less investment. Finally, I provide support why stock market usually has more profit than bond market or bank deposit.