This model shows the operation of a simple economy. It demonstrates the effect of changes in the fractional rate of consumption (or the converse, the fractional rate of saving.) It also shows the influence Savings has on the production rate.

This version adds an interest rate paid on Savings, so accumulated Savings grows on its own in addition to the production/consumption dynamics. This creates a second, independent reinforcing loop: more Savings → more interest income → more Savings.

This model shows the operation of a simple economy. It demonstrates the effect of changes in the fractional rate of consumption (or the converse, the fractional rate of saving.) It also, unlike Models 2 & 3, shows the influence Savings has on the production rate.

In summary, lower rates of consumption (based on production) result in higher rates of both production and consumption in the long-run.

Jon Darkow - Model 2: Growth with limited resources