The so-called Paradox of Thrift that became quite obvious in the Great Recession of 2007-2009 does not refer to which of the following?
A)Saving may be virtuous for the individual, but it could be bad for the economy as a whole.
B)Consumers becoming thriftier may help long-term growth but, ironically, reduces current output.
C)In trying to spend less now, consumers will end up spending more later on.
D)As individuals try to save more, the whole group may end up saving less as total income declines.

Question

Quizplus · Accepted Answer

The Paradox of Thrift suggests that increased saving can lead to a decrease in aggregate demand, thus reducing total income and potentially leading to less saving overall, not that consumers will spend more later on.

The So-Called Paradox of Thrift That Became Quite Obvious in the Great