Introduction

At a fundamental level, an economic system has a very few elements: production rate, consumption rate, and Savings level.

I have attempted, with this model, to demonstrate the interrelationships between these elements. Most important, I have tried to show the importance of relative rates of consumption. I have done this with three versions of the same model, which I describe in the next tab (above).

The Model: Three Versions

I have provided the following three versions of the same model. I will summarize those versions briefly below:

Version 1: Version 1 consists of the very same model with which we concluded the section on the model development. This version gives you the opportunity to review the components of the model and try some variations in simulation.
Version 2: In Version 2 I have taken "the reins" of an otherwise identical model to demonstrate effects of dramatic changes in fractional consumptions rates on long-term production rates and consumption rates.
Version 3: And, Version 3 provides yet another variation on the same theme by inputting progressively higher fractional consumption rates over the duration of the model. (You can actually enter data that will reverse that trend.)

Conclusion

Taken together these models develop the relationship between production rates, consumption rates, and savings level over a long period of time. In general, they demonstrate that short-term changes in consumption rates in one direction lead to long-term changes in consumption rates in the opposite direction.

The Keynesian "savings dilemma" does not exist. A choice does, however, exist between having a little more now and having a lot more in the long-run.

Now, let's examine the effects of economic intervention…