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

question 118

Multiple Choice

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

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

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