Question

From the long-run perspective of economic growth, saving threatens growth because of:

a) The paradox of thrift.
b) Causes the long-run aggregate supply curve to shift to the left.
c) Is a basic source of investment financing.
d) Shifts the production possibilities curve inward.

Answer 1

The paradox of thrift suggests that when individuals save more, the overall level of saving in the economy diminishes and can lead to a decrease in economic growth.

Step-by-step explanation:

The correct answer is a) The paradox of thrift. The paradox of thrift suggests that when individuals save more, the overall level of saving in the economy diminishes and can lead to a decrease in economic growth. This is because when people save more and spend less, it reduces consumer demand and can lead to a decrease in production and economic activity. In the long run, this can impact economic growth negatively.