Savings are good for a family.If all families increase savings, the economy is better off.This fallacy of composition is called:

Question

Quizplus · Accepted Answer

The paradox of thrift states that while saving at an individual level is good, if everyone in the economy saves more, it could lead to a decrease in overall spending and worsen economic conditions. This fallacy of composition is due to the fact that what may be good for an individual may not necessarily be good for the economy as a whole.

Savings Are Good for a Family