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Classroom Newsletter: Wait, Is Saving Good or Bad? The Paradox of Thrift

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Classroom Newsletter: Wait, Is Saving Good or Bad? The Paradox of Thrift

GRADE LEVEL: 9-12, college, and adult

OVERVIEW: The average saving rate for the typical American household before the recession started in 2007 was 2.9 percent; since then it has risen to 5 percent. Uncertainty about the future was the primary driver for the increase. More saving is a good thing, right? Well, some economists argue it might be detrimental to the overall economy. Given the benefits to individuals, how could this be? This newsletter explores this "paradox of thrift."

KEY TOPICS: economics, civics/government, personal finance, saving, factors of production/productive resources

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