In an economy if all individual increases the proportion of income they save, then arrange following statements in their chronological order.

(A) Marginal propensity to consume decreases.

(B) The level of income decreases.

(C) The amount of savings remains the same.

(D) The aggregate demand curve rotates downwards.

Choose the correct answer from the options given below:

Option 1 -> Incorrect chronological sequence; aggregate demand changes before income level.

Option 2 -> Incorrect; savings remaining same happens after income decreases, not before.

Option 3 -> Incorrect; MPC decrease is the first event, not income decrease.

Option 4 -> Correct sequence following the Paradox of Thrift mechanism.

Hence, Option 4: (A), (D), (B), (C) -> This represents the correct chronological order of the Paradox of Thrift: First, when individuals decide to save more, the Marginal Propensity to Consume (MPC) decreases (A) - this is the initial behavioral change. Next, reduced consumption causes the Aggregate Demand curve to rotate downwards (D) as total spending in the economy falls. This decrease in aggregate demand leads to a decrease in the level of income (B) through the multiplier effect, as businesses produce less and hire fewer workers. Finally, despite the intention to save more, the amount of savings remains the same (C) because lower income offsets the higher saving rate - this is the paradox of thrift where attempts by everyone to save more actually result in the same or even lower total savings -> correct