Introduction to Economics 2 Deneme Sınavı Sorusu #349587

In the saving paradox situation, which of the following increases?


Income

 

Consumption

 

Demand

 

Saving

Injection


Yanıt Açıklaması:

Saving Paradox is the reduction in the consumption expenditures and, therefore, income because of rising savings. This is a paradox indicating that increasing saving reduces consumption and, therefore, income; however, at this new income level savings are at the same level. When you consider the fact that savings are used to finance investments in the country, this result contradicts the widespread belief that savings are beneficial for the economy.

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