According to the Paradox of Thrift, When Everyone Saves More

question 182

Multiple Choice

According to the paradox of thrift, when everyone saves more,

• A) businesses raise prices.
• B) banks raise interest rates.
• C) government spend more.
• D) businesses lay off workers.
• E) households spend more.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually derived from profits.

Management Fees

Charges levied by management for the operation of an investment fund, company, or another entity, usually calculated as a percentage of assets under management.

Consolidated Retained Earnings

The portion of net earnings not paid out as dividends, but retained by the company to reinvest in its core business, or to pay debt, reported in the consolidated financial statements.

Subsidiary's Adjusted Income

The net income of a subsidiary company after making adjustments for fair value measurements, currency translation, and other accounting policies.