Economics · Keynesian Economics
S1: The 'Paradox of Thrift' suggests that while individual saving is a virtue, collective saving during a recession can lead to a fall in aggregate demand. S2: This reduction in consumption further contracts the economy, ultimately leaving everyone poorer. Select the most appropriate and relevant co-relationship of the second sentence to the first:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Questions the ethical basis of individual saving.
- 2Proposes a policy solution to the problem of low consumption.
- 3Contradicts the paradox by showing the benefits of saving.
- 4Explains the mechanism by which the paradox operates.✓
Correct answer
Explains the mechanism by which the paradox operates.
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