If a result of households wish to save more there is a change in equilibrium income and no change in equilibrium saving this is an example of ?
Correct answer: C. the paradox of thrift
- A. market imperfection
- B. the law of diminishing returns
- C. the paradox of thrift
- D. market failure
Explanation
The paradox of thrift occurs when everyone tries to save more, reducing consumption and equilibrium income while leaving total equilibrium saving unchanged.
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