The Paradox of Thrift Is the Idea That an Increase

question 18

Multiple Choice

The paradox of thrift is the idea that an increase in savings can cause:

• A) an increase in GDP and income, which reduces the need for savings.
• B) a drop in GDP and income, which leads to a drop in savings.
• C) an increase in spending due to the interest earned on the savings.
• D) a decrease in spending, which causes interest rates to rise.

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Definitions:

College Professorship

A faculty position at a college or university, often including roles such as teaching, research, and administrative responsibilities.

Mutually Exclusive

A statistical term describing events that cannot occur at the same time, indicating no overlap in outcomes.

Joint Probability

The likelihood of two events happening at the same time.

Conditional Probability

The probability associated with an event under the condition that a separate event has already transpired.