Final answer:
A negative savings rate indicates spending more than one's income, which can lead to a shift in the budget constraint and a negative income effect, resulting in reduced purchasing of normal goods. Government budgets can also influence private saving behaviors.
Step-by-step explanation:
A "negative" savings rate does not necessarily mean you aren't saving as much money as you should; it technically means that you are saving less than you are earning, or in other words, you are spending more than your income. This may result in borrowing more or depleting existing savings, and can lead to a shift in your budget constraint toward the origin, representing less purchasing power. When your income decreases, such as when an expected check fails to arrive, this is referred to as a negative income effect. Consequently, you may find yourself purchasing fewer normal goods due to the reduced financial resources at your disposal. Factors such as government budgets may also influence private saving behaviors; for instance, higher government deficits could prompt individuals to save more, anticipating future tax increases to pay off the debt.