In an economy if all individual increases the proportion of income they save, then arrange following statements in their chronological order.

(A) Marginal propensity to consume decreases.
(B) The level of income decreases.
(C) The amount of savings remains the same.
(D) The aggregate demand curve rotates downwards.

Choose the correct answer from the options given below:

(A), (D), (B), (C)

The correct answer is Option (4) → (A), (D), (B), (C)

(A) Marginal propensity to consume decreases. When individuals decide to save a larger portion of their income, their marginal propensity to consume (MPC) naturally decreases, as they are spending less out of each additional unit of income.

(D) The aggregate demand curve rotates downwards. With less consumption, aggregate demand falls, leading to a downward rotation of the aggregate demand curve, because consumption is a major component of aggregate demand.

(B) The level of income decreases. As aggregate demand falls, production and income in the economy decline, since lower demand leads to lower output and employment.

(C) The amount of savings remains the same (Paradox of Thrift). Although people intend to save more, due to the fall in income, their actual savings may remain unchanged — a concept known as the paradox of thrift.