The Paradox of Excessive Consumption Argues That When Households Spend

question 86

Multiple Choice

The paradox of excessive consumption argues that when households spend all they earn,

• A) actual output and potential output will be in equilibrium.
• B) the financial anxiety of families will be low.
• C) the economy will achieve rapid, sustainable growth.
• D) consumption can stagnate because families are in a poor position to deal with increases in debt and financial setbacks.

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Definitions:

Void Contract

is an agreement without legal effect or binding force from its inception due to failure to meet essential legal requirements.

Justified Reliance

Legitimate dependence by a party on the representation or promise of another, typically in a legal or contractual context.

Scienter

A legal term that refers to knowledge of the wrongful nature of one's act or omission or the intent to deceive or defraud.

Fraud

Deliberate misleading actions taken to benefit oneself or harm another person.