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To understand the paradox of thrift, it is necessary to assume that investment is unrelated to...

To understand the paradox of thrift, it is necessary to assume that investment is unrelated to income

TRUE

FALSE

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Answer #1

Answer to the question:

Option: False.

Explanation: The paradox of saving or paradox of thrift states that if all the individuals start saving more and more, then the consumption will decline which will cause the general income and output to decline. During recession, people reduces consumption and raises the saving which further hamper the economy by loweing the consumption and income. It has no such relation with the income and investment, ather it is related to the saving rate and the output.

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