Consider a country whose economic structure matches the assumptions of the classical model. After reading a recent best-seller documenting a growing population of low-income elderly people who were ill prepared for retirement, most residents of this country decide to increase their saving at any given interest rate. Explain whether or how this could affect the following:

$\left(a\right)$ The current equilibrium interest rate

$\left(b\right)$ Current equilibrium real $GDP$

$\left(c\right)$ Current equilibrium employment

$\left(d\right)$ Current equilibrium investment

$\left(e\right)$ Future equilibrium real $GDP$

The saving curve changes rightward if consumers elect to increase their savings at any interest rate. As a result, the average interest rate falls.

Because the lengthy aggregate supply curve in the classical model is vertical, the present stable real $GDP$ will not be altered by excessive saving. This means that pricing changes will have no long-term impact on the level of full employment.

A change in the savings rate has no effect on labour demand and supply since, according to the classical model, supply produces all its demand and price changes have no effect on production. As a result, the equilibrium employment situation will be unaffected.

The saving curve swings rightward as the saving rate rises. As a result, the investment demand curve is moving downward. As a result, the equilibrium investment rises.

As you may be aware, more investment leads to more capital accumulation. As a result, future production will increase, and equilibrium real $GDP$ will rise in the future.