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Why might it not be a good idea to implement the golden-rule savings rate? What are...

Why might it not be a good idea to implement the golden-rule savings rate? What are the benefits?

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Answer #1

Golden rule savings rate encourages maximum amount of savings and a steady level of consumption.

Implementing this rule might not be a good idea because it decrease the present consumption of the people and make people sacrifice their current consumption for future generations so that they can have a higher level of consumption. This rule is unfair as the current generation will have to limit it's consumption.

However the only benefit this rule is that it increases consumption rate in Long run.

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