is the Fallacy of Composition
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Title: is the Fallacy of Composition

Essay Details:

Subject: Business
Author: Mark R
Date: June 16, 2016
Level: University
Grade: A
Length: 2 / 322

Essay text:

If everyone tries to save more, everyone is cutting back on consumption. Business sales fall by hundreds of millions of dollars a week. Moreover, if 130 million people each cut back by $10 a week, that comes to a weekly reduction of $1.3 billion. Over the course of a year, this will add up to $67.6 billion! This $67.6 billion decline in consumption will have a multiplied effect on GDP. If the multiplier is 4, GDP will decline by $270.4 billion; if it is 6, GDP will decline by $405.6 billion. Surely such declines are typical of depressions. When retailers get the idea that business will be off over the next few months, they do two things: lay off employees and cut back on their inventory...

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