Based on Our Understanding of the Paradox of Saving, We

question 11

Multiple Choice

Based on our understanding of the paradox of saving, we know that a decrease in the desire to save will cause:

• A) a decrease in equilibrium output.
• B) an increase in equilibrium output.
• C) an increase in the desire to invest.
• D) a permanent decrease in the level of private saving.
• E) no change in equilibrium output.

---

Definitions:

Loan

Money that is borrowed from a bank, financial institution, or individual under the condition that it will be paid back with interest.

Compounded Quarterly

Compounded quarterly refers to calculating interest on the principal amount and the accumulated interest every quarter, or four times a year.

Quarterly Withdrawals

Withdrawals from an account or fund that occur four times each year, typically every three months.

Education Fund

A savings or investment account set aside for the purpose of funding educational expenses.