In the Paradox of Thrift

question 15

Multiple Choice

In the paradox of thrift:

• A) firms that are pessimistic about the future lay off the most saving-conscientious workers.
• B) when families and business are feeling pessimistic about the future, they spend more.
• C) increased saving by individuals increases their chances of becoming unemployed.
• D) risky behavior during economic tough times has large negative consequences for society.

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Definitions:

Annual Cost Savings

The reduction in expenses that a company achieves within one year through cost-cutting measures or process improvements.

Pretax Return

The income or profit that a company generates before any taxes have been applied.

Discount Factor(s)

A mathematical factor used to calculate the present value of a future amount of money or stream of cash flows.

Intangible Benefits

Advantages or gains from a project or investment that are not directly quantifiable in monetary terms, such as improved customer satisfaction or brand reputation.