Economics · Macroeconomics
Keynesian 'Paradox of Thrift' states that an attempt by households to increase autonomous saving leads to:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Higher inflation due to reduced availability of funds
- 2A decline in aggregate spending, lower national income, and unchanged or lower total savings✓
- 3A fall in the interest rate that boosts private investment expenditure
- 4An increase in total aggregate savings and economic growth
Correct answer
A decline in aggregate spending, lower national income, and unchanged or lower total savings
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