Suppose in economies and the aggregate value of output is , the sum of aggregate consumption and lump-sum government expenditures. The government imposes only lump-sum direct taxes and suppose denotes the aggregate value of such taxes collected by the government. , where is the value of autonomous consumption expenditures, is the constant marginal propensity to consume out of income and is the aggregate value of disposable incomes in the economy. The value of is higher in than in .
Suppose the value of is the same in both economies. Suppose that the value of is higher in economy than in economy . In which economy will aggregate private saving be higher?
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