Option 4: (A), (D), (B), (C) -> When the proportion of income people save increases, the following chain of events occurs: First, (A) the marginal propensity to consume decreases as people choose to save more. This leads to (D) the aggregate demand curve shifting downwards because consumption expenditure falls. Lower aggregate demand causes (B) the level of income to decrease through the multiplier effect (paradox of thrift). Finally, (C) the amount of savings remains the same because even though income has fallen, people maintain their higher savings rate, resulting in the same absolute savings. This demonstrates the paradox of thrift where increased attempts to save can lead to lower national income without an increase in total savings. -> correct
Arrange the following statements in chronological order in respect to the increase in the proportion of income people save. (A) Marginal propensity…
CUET UG 2025 — Economics Macro
Arrange the following statements in chronological order in respect to the increase in the proportion of income people save.
(A) Marginal propensity to consume decreases.
(B) The level of income decreases.
(C) The amount of savings remains the same.
(D) The aggregate demand curve shifts downwards.
Choose the correct answer from the options given below:
- (A), (B), (C), (D)
- (A), (C), (B), (D)
- (B), (A), (D), (C)
- (A), (D), (B), (C)
Held on 31 May 2025 · Verified 13 Jul 2026.
Options
- A
(A), (B), (C), (D)
- B
(A), (C), (B), (D)
- C
(B), (A), (D), (C)
- D
(A), (D), (B), (C)
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