Downward swing of Aggregate Demand (AD) line is described as:
Paradox of Thrift
The downward swing of the Aggregate Demand (AD) curve, also referred to as the "Paradox of Thrift", happens when individuals save more money, reducing their consumption, which in turn leads to a decrease in overall demand and a negative impact on the economy.
While thrift can be good for individuals, it can reduce the total demand in the economy, which contradicts the idea of economic growth.
Important Questions from Determination of Income and Employment
If the marginal propensity to consume is 0.8, the value of the investment multiplier will be:
Increase in income Rs. 2000 crore and MPC = 0.8. How much increase in investment?
Match List-I with List-II.
List-I List-II A. Income increases, Demand increases I. Complementary Goods B. Income increases, Demand decreases II. Substitute Goods C. Demand varies directly with the price of the related good III. Inferior Goods D. Goods consumed together IV. Normal Goods Choose the correct answer from the options given below:
If Marginal Propensity to Consume (MPC) is 0.75, what will be the value of Investment Multiplier?
Which of the following curve is graphically depicted by a 45° line passing through the origin?
