Paradox of Thrift

Question 1

An increase in savings is blank for the economy in the short-run because blank

Answer 1

An increase in savings is bad for the economy in the short-run because more savings = less spending

Question 2

An increase in savings is blank for the economy in the long-run because blank

Answer 2

An increase in savings is good for the economy in the long-run because amount of savings = amount of business investment

Question 3

AD curve: when the US price level rises, Consumer spending blank, US exports blank, US imports blank, and business investment (I) blank

Answer 3

AD curve: when the US price level rises, consumption spending decreases, US exports decreases, US imports increases, and business investment (I) decrease

Question 4

LOOK at AD curve graph example at the bottom of the page

Answer 4

okay