If All of the Households and Businesses Start Saving More

question 20

Multiple Choice

If all of the households and businesses start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as:

• A)the quantity theory.
• B)the crowding-out theory.
• C)the paradox of thrift.
• D)the permanent income hypothesis.

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Definitions:

Multiple Causes

Multiple causes refer to the concept that most events or phenomena result from a complex interaction of various factors, rather than a single cause.

Objective Cause

An event or factor that independently exists and leads to a specific outcome or effect.

Subjective Causes

Factors perceived or experienced from an individual's own perspective, which can influence their thoughts, feelings, or behaviors.

Structuralism

A pioneering psychology branch that employed self-examination to investigate the basic architecture of the human psyche.