Solution

It in an economy as people become more thrifty they end up saving less or same as before in aggregate. This theory produced by Keynes "When people start saving money Instead of spending it. In response to growing concerns about a recession. they actually make the recession worse." Rise in MPS means a fall in MPC. When MPC falls. aggregate consumption expenditure In the economy falls It leads to rise Inventory level producers and firms would plan to reduce the production It will reduce the demand for factor services and factor incomes. As a result the total volume of saving generated in the economy would fall or remain unchanged