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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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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