According to the paradox of thrift increased efforts to save will cause ?
Correct answer: B. a decrease in income and an overall decrease in saving
- A. an increase in income and an increase in overall saving
- B. a decrease in income and an overall decrease in saving
- C. a decrease in income but an increase in saving
- D. an increase in income but no overall change in saving
Explanation
If everyone tries to save more, consumption and aggregate demand fall, reducing income and output; this fall in income can cause total actual saving to decrease rather than rise.
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