Related to the Economics in Practice on P

question 251

Multiple Choice

Related to the Economics in Practice on p. 156: According to the "paradox of thrift," as individuals decrease their saving

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

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Definitions:

Productivity Decreases

A reduction in the rate at which goods or services are produced, especially in relation to the effort, resources, or costs involved.

Group Size

Refers to the number of individuals forming a team or a collective.

Piece Rate Pay Systems

Compensation structures where employees are paid a fixed rate for each unit of production completed, often used to incentivize higher productivity.

Productivity

Measures the efficiency of production output in relation to the input used within a given period, commonly assessed in workplace and economic contexts.