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4. Consider the impact of an increase in thriftiness in the Keynesian cross model. Suppose the con- sumption function is C = c + c(Y
4. Consider the impact of an increase in thriftiness in the Keynesian cross model. Suppose the con- sumption function is C = c + c(Y T), where C is a parameter called autonomous con- sumption that represents exogenous influences on consumption and c is the marginal propensity to consume. a. What happens to equilibrium income when the society becomes more thrifty, as repre- sented by a decline in C? b. What happens to equilibrium saving? c. Why do you suppose this result is called the paradox of thrift
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