Q. 64.7( 3 Votes )
Explain ‘Paradox of Thrift’.
Answer :
The growth of a country is dependent upon its level of investment and level of investment depends upon the level of savings that is thrift or savings lead to increased income in the economy.
According to Prof. Keynes, the increase in savings in the economy may not benefit the economy as a whole because if all people will increase the proportion of income they save, the total value of savings will not increase. It will either decline or remain unchanged.
The paradox of thrift states that as people become thriftier, they end up saving less or same as before.
With help of following chart we can understand it easily
Rate this question :
Sex determination45 mins
Given saving curve, derive consumption curve and state the steps in doing so. Use the Diagram.
Economics - Board PapersIf nominal income is Rs 500 and the price index is 125, calculate the real income.
Economics - Board PapersAn economy is in equilibrium. Find investment expenditure.
National income = 1200
Autonomouns consumption expenditure = 150
Marginal propernsity to consumer = 0.8
Economics - Board PapersSale of petrol and diesel cars is rising particularly in big cities. Analyse its impact on gross domestic product and welfare.
Economics - Board Papers