Related to the Economics in Practice on P

Multiple Choice

Related to the Economics in Practice on p. 156: According to the "paradox of thrift," as individuals decrease their saving

A) income in the economy decreases because there is less money available for firms to invest.
B) income in the economy decreases because interest rates will rise and the economy will contract.
C) income in the economy will remain constant because the change in consumption equals the change in saving.
D) income in the economy will rise because the increased consumption that results from decreased saving causes the economy to expand.