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The paradox of saving (thrift) states that:
Attempts by people to save more lead both to a decline in output and to unchanged saving.
An increase in saving leads to an increase in income; however, the marginal propensity to consume increases, while the marginal propensity to save falls, leading to an increase in consumption which is greater than the increase in saving.
Attempts by people to save more lead both to a decline in output and to a decrease in saving.
An increase in saving and planned investment leads to an increase in income; however, as income increases, the average propensity to save decreases, leading to a fall in aggregate saving.
Attempts by people to save more lead both to unchanged output and to unchanged saving.
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