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.

Solution

Correct option is D

The Paradox of Thrift suggests that although saving is typically good for an individual, if everyone starts saving more simultaneously, it may lead to a decrease in aggregate demand and hence overall savings of the economy may not increase; they may actually decline or remain unchanged.

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