The Paradox of Thrift Occurs When

question 52

Multiple Choice

The paradox of thrift occurs when:

• A)an increase in saving raises output.
• B)an increase in saving reduces output.
• C)saving is unrelated to output.
• D)a decrease in saving reduces output.

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Definitions:

Consumption of Fixed Capital

The depreciation of physical assets' value over time due to use, wear and tear, or obsolescence.

Negative Investment

Investment activities that lead to a decrease in the capital stock or value of assets over time.

GDP

The Gross Domestic Product represents the sum of the market or monetary value of every finished product and service made inside a nation's boundaries over a particular time frame.

Market Value

The current price at which an asset or service can be bought or sold in the open market.