(a)[12]
In 2012 it was reported that consumers should not be encouraged to save more and cut their debts. A rise in saving would create a Keynesian ‘paradox of thrift’ which would not aid economic growth. Instead, consumers should spend money on new purchases. (Source: The Times. 2011) (a) Explain and comment on what is meant by ‘the paradox of thrift’.
(b)[13]
(b) Discuss the meaning of economic growth and consider whether spending money on new purchases would necessarily help economic growth.