Question:medium

According to the paradox of thrift, if people in an economy increase their savings excessively, it may lead to:

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The "Paradox" part is that individual "thrift" (virtue) becomes a collective "vice" for the economy. One person's spending is another person's income!

Updated On: May 13, 2026

Rise in national income
Increase in employment
Fall in aggregate demand
Increase in exports

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The Correct Option is C

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Top Questions on Consumption and Saving Functions

Match List-I with List-II:

List-I	List-II
(A) Average propensity to save	(I) Inversely related to the investment multiplier
(B) Average propensity to consume	(II) Ratio of change in consumption to change in income
(C) Marginal propensity to save	(III) Always less than one
(D) Marginal propensity to consume	(IV) Can’t be zero

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