Macro

Income & Employment

Easy

'Paradox of Thrift' refers to-

As people become more thrifty they save more.

As people become more thrifty they invest more in bonds.

As people become more thrifty they end up saving less or same as before.

As people become more thrifty they spend more on expensive goods.

✅ Correct Option: 3

If all people try to save a larger fraction of income, aggregate demand falls, output and income contract through the multiplier, and total savings in the economy end up the same or even lower than before. This self-defeating outcome of increased thrift is the paradox of thrift.

2022: 15 July Shift 2

The size of investment multiplier (k) depends on:-

2023: 29 May Shift 2

C=40+0.8Y and I =10, then what will be the equilibrium level of income?

2025: 22 May Shift 1

......... is the situation where the equilibrium level of output is less than the full employment of output.

2022: 19 July Shift 2

Assume a two sector economy in the above diagram, the initial demand curve $AD_1$ shifts upward to $AD_2$ due to :

2025: 13 May Shift 2

If aggregate demand changes, the equilibrium level of income changes. This can happen in any one or combination of the following situations:

(A) Change in consumption.

(B) Multiplier Effect.

(D) Change in Investment.

Choose the correct answer from the options given below:

2026: 21 May Shift 2

The situation in which the equilibrium level of output is less than full employment of output, is called as:

'Paradox of Thrift' refers to-

Solution

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