In the Basic AD/AS Macro Model, the "Paradox of Thrift

question 20

Multiple Choice

In the basic AD/AS macro model, the "paradox of thrift" is only a short- run phenomenon because

• A)consumers base their consumption expenditures only on their lifetime income.
• B)the marginal propensity to consume is fixed in the long run.
• C)savings are transformed into expenditures in the long run.
• D)in the long run output is determined by potential output.
• E)consumers exhibit cyclical consumption behaviour.

---

Definitions:

Script

A structured sequence of behaviors, actions, or instructions designed to achieve a specific goal or perform a particular function.

Autobiographical Memory

The aspect of memory that involves the recollection of personal experiences and events from an individual's life.

Recognition

The cognitive process of identifying and acknowledging the familiarity of an object, person, or piece of information.

Recall

The mental process of retrieving information from the past.