Question

The paradox of thrift accounts that both investors and consumers want to spend during a recession or depression, thereby increasing employment and enhancing the chances of recovery.A. TrueB. False

Answer 1

Answer: False

Step-by-step explanation:

The Paradox of Thrift Accounts posits that having savings in a recession is bad because it would lead the economy to even worse levels of recession.

During recessions, people tend to save more and investors tend to invest less. Consumers do so because they hope the savings will enable them survive should something happen and investors don't want to lose money in recessions.

This Paradox argues that both investors and consumers who spend more so that employment will rise as well as production and pull the economy out of a recession.