Arrange the following as per the theory of the 'Paradox of Thrift':

(A) Marginal Propensity to consume decreases.

(B) Amount of savings decreases.

(C) People become more thrifty.

(D) Equilibrium level of income decreases.

Choose the correct answer from the options given below:

1. (C), (A), (D), (B)
2. (A), (C), (B), (D)
3. (B), (A), (C), (D)
4. (C), (B), (A), (D)

Option 1 -> (C), (A), (D), (B): People become more thrifty → MPC decreases → Equilibrium income decreases → Savings decrease. This correctly represents the paradox sequence.

Option 2 -> (A), (C), (B), (D): Incorrect starting point; MPC decrease is not the initial trigger.

Option 3 -> (B), (A), (C), (D): Illogical; savings cannot decrease before people become thrifty.

Option 4 -> (C), (B), (A), (D): Incorrect; savings don't decrease immediately after becoming thrifty.

Hence, Option 1: (C), (A), (D), (B) -> The Paradox of Thrift follows a specific causal chain: First, people decide to become more thrifty (C), which means they want to save more. This causes the Marginal Propensity to Consume to decrease (A) as people spend less. Reduced consumption leads to lower aggregate demand, causing the equilibrium level of income to decrease (D) through the multiplier effect. Ultimately, despite people's intention to save more, the fall in income means the total amount of savings in the economy actually decreases (B) - this is the paradox! -> correct