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paradox of thrift??

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paradox of thrift??

Posted by Harshita Vijayvargiya 5 years, 9 months ago

CBSE > Class 12 > Economics

1 answers

Canada'S ?? Julliet Anu 5 years, 9 months ago

When all the people in the economy start saving means there MPS has increased even then saving will not increase. It will either decline aur remains constant. It happens because more saving leads to less investment in the economy. As a result production reduces as well as the income of the people also decreased. Now with less income people will save less. This is known as paradox of thrift. In simple words the savings will not increase when all the people will start saving in the economy. It it may remain constant also.

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