Asked by Liezel Paglinawan on May 01, 2024

verifed

Verified

The paradox of thrift suggests that

A) "a penny saved is a penny earned."
B) as consumption increases,saving decreases.
C) the less you pay,the lower the satisfaction.
D) attempts to save more may actually reduce total saving.

Paradox of Thrift

If everyone tries to save more, they will all end up saving less.

Consumption

The use of goods and services by households, which is a key component in calculating a country's Gross Domestic Product (GDP).

  • Explain the paradox of thrift and its economic implications.
verifed

Verified Answer

CH
Chase HaimerlMay 08, 2024
Final Answer :
D
Explanation :
The paradox of thrift is the idea that if everyone tries to save more, it could actually result in a decrease in total saving. This is because when people save more and consume less, it can lead to a decrease in aggregate demand for goods and services, which can decrease production and income. As a result, people may actually end up saving less in the long run.