In the paradox of thrift:
A) firms that are pessimistic about the future lay off the most saving-conscientious workers.
B) when families and business are feeling pessimistic about the future, they spend more.
C) increased saving by individuals increases their chances of becoming unemployed.
D) risky behavior during economic tough times has large negative consequences for society.

Question

Quizplus · Accepted Answer

The paradox of thrift refers to the idea that if individuals or households try to save more during tough economic times, it can actually have negative effects on the overall economy. This is because increased saving can lead to decreased consumer spending, which can in turn lead to decreased demand for goods and services and ultimately lead to job losses. So, increased saving by individuals can increase their chances of becoming unemployed, making choice C the best answer.

In the Paradox of Thrift