00:02
Okay, question eight.
00:05
What is the fundamental trade -off that society faces if it chooses to save more? how might the government increase national saving? so the answer to the first question is the trade -off that the society faces when it is to save more or not, is the trade -up between substitution effect.
00:30
In fact, say there is a policy that encourages saving.
00:40
So every bank in the society is raising the interest rate.
00:45
So if you save $1, say, 1 .2 tomorrow.
00:51
So this way, it provides an incentive for people to save their money, right? this is called the substitution effect.
01:00
So instead of put your money in a bank, prefer it to put your money in a bank so that it grows tomorrow.
01:10
But another thing is the income effect...