Macro

Income & Employment

Hard

Paradox of Thrift means :

If all the people of the economy increase the proportion of income they save, the total value of investment in the economy will not increase, it will either decline or remain unchanged.

If all the people of the economy increase the proportion of income they spend, the total value of savings in the economy will not increase, it will either decline or remain unchanged.

If all the people of the economy decrease the proportion of income they save, the total value of savings in the economy will not increase, it will either decline or remain unchanged.

If all the people of the economy increase the proportion of income they save, the total value of savings in the economy will not increase, it will either decline or remain unchanged

✅ Correct Option: 4

The term Paradox of Thrift refers to a situation where -> individuals increase savings, but -> national savings may not increase.

Save more -> no increase in investment.
Spend more -> no increase in savings.
Save less -> no increase in savings.
Save more -> decrease or same savings.

Option 4 is correct: If all people -> increase savings proportion, then -> total savings will decrease or remain unchanged.

2025: 21 May Shift 1

In an economy, the consumption curve and saving curve are parallel to each other. What will be the value of investment multiplier in this economy?

2024: 16 May

When there is unexpected rise in the sales

2023: 28 May Shift 2

The aggregate demand line shifts parallel upwards. The reason behind this is :

2025: 29 May Shift 2

The ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous investment expenditure is known as?

2022: 15 July Shift 2

In an Economy, AD = Rs.250 cr+0.6Y and at zero level of income consumption is Rs.150 crores The value of autonomous investment will be:

2025: 22 May Shift 1

Match List-I with List-II

List-I	List-II
(A). Marginal propensity to consume (MPC)	(I). C/ Y
(B). Consumption function	(II). C + I
(C). Average propensity to consume (APC)	(III). ΔC/ ΔY
(D). Aggregate Demand	(IV). C = c + cY

Choose the correct answer from the options given below:

Paradox of Thrift means :

Solution

Related questions:

Keyboard Shortcuts

CUET Economics Past Year Questions (Topic-Wise)