Related to the Economics in Practice on p.472: According to the "paradox of thrift," increased efforts to save will cause a(n)
A)increase in income and an increase in overall saving.
B)increase in income but no overall change in saving.
C)decrease in income and an overall decrease in saving.
D)decrease in income but an increase in saving.

Question

Quizplus · Accepted Answer

The paradox of thrift suggests that if everyone tries to save money, then demand for goods and services decreases, leading to a decrease in overall economic activity, which results in lower incomes and a decrease in overall saving. Therefore, an increase in efforts to save will cause a decrease in income and an overall decrease in saving (option C).

Related to the Economics in Practice on P