Related to the Economics in Practice on P

question 116

Multiple Choice

Related to the Economics in Practice on p.472: According to the "paradox of thrift," as individuals increase their saving,

• A)income in the economy increases because there is more money available for firms to invest.
• B)income in the economy increases because interest rates will fall and the economy will expand.
• C)income in the economy will remain constant because the change in consumption equals the change in saving.
• D)income in the economy will fall because the decreased consumption that results from increased saving causes the economy to contract.