Economics · Macroeconomics
In the Keynesian framework, the 'paradox of thrift' implies that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Saving plays no role in national income determination
- 2Attempts by individuals to save more can lead to a decrease in aggregate demand and leave total savings unchanged or reduced✓
- 3Increased individual saving leads to an equivalent increase in aggregate capital formation
- 4An increase in the willingness to save leads to higher national investment and economic growth
Correct answer
Attempts by individuals to save more can lead to a decrease in aggregate demand and leave total savings unchanged or reduced
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