Because saving is a leakage,sudden additional saving results in higher equilibrium income for society,ceteris paribus.
Additional saving actually leads to lower equilibrium income because saving is not spent and therefore creates no immediate income.This is sometimes called the paradox of thrift.

Question

Quizplus · Accepted Answer

The statement contradicts the standard Keynesian view that additional saving leads to higher equilibrium income. The paradox of thrift suggests that an increase in saving in the short run can lead to a decrease in consumption and investment, causing a contraction in output, employment, and income. However, in the long run, the increase in saving can lead to higher investment and growth, offsetting the negative impact on consumption.

Because Saving Is a Leakage,sudden Additional Saving Results in Higher