Question:
Paradox of Thrift implies:
Paradox of Thrift implies:
Updated On: Oct 29, 2024
- If all the people of the economy increase the proportion of income they save, the total value of investment in the economy will not increase, it will either decline or remain unchanged.
- If all the people of the economy increase the proportion of income they spend, the total value of savings in the economy will not increase, it will either decline or remain unchanged.
- If all the people of the economy decrease the proportion of income they save, the total value of savings in the economy will not increase, it will either decline or remain unchanged.
- If all the people of the economy increase the proportion of income they save, the total value of savings in the economy will not increase, it will either decline or remain unchanged.
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The Correct Option is D
Solution and Explanation
The Paradox of Thrift means that when everyone tries to save more, aggregate demand falls, leading to a potential drop in total savings and income.
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