ABSTRACT
There remains one relationship in a state of steady growth which is of very great importance and which we will discuss in the present chapter. We have shown that in a state of steady growth the growth rate of income is unaffected by the proportion of income saved but that the level of income is affected by the savings proportion. But how does the savings proportion affect the level of consumption, as contrasted with the level of income, in a state of steady growth? Here there are two opposing tendencies at work. On the one hand, a high savings proportion will, as we have argued, lead to a high level of income. But, on the other hand, a high savings proportion will, of course, mean that there is less available for consumption out of any given level of income. Which influence will prevail? Will a higher savings proportion lead to a higher or to a lower level of consumption in a state of steady growth?
