Paradox of Thrift means:

The correct option is:
If all the people of the economy increase the proportion of income they save, the total value of savings in the economy will not increase, it will either decline or remain unchanged.

Step-by-Step Explanation:

The Paradox of Thrift is a fundamental concept in Keynesian economics that highlights a conflict between individual actions and collective economic outcomes.

1. Individual Action vs. Aggregate Effect:
From an individual perspective, saving more money is generally considered a prudent and financially sound decision (thriftiness). However, if every household in an economy simultaneously decides to save a higher proportion of their income, it leads to unintended macroeconomic consequences.

2. The Mechanism of the Paradox:
Income in an economy is circular. One person's spending becomes another person's income. When all individuals attempt to save more, they must consume less. Therefore, aggregate consumption demand declines sharply.
A decline in aggregate demand leads to a reduction in the production of goods and services. To adjust to lower demand, firms reduce output and lay off workers, causing employment levels and aggregate income to fall.

3. The Final Outcome:
Because total income in the economy has fallen, the actual amount of savings that individuals can accumulate also drops. Since saving is a function of income (represented as $S=f\left(Y\right)$), a lower aggregate income ($Y$) means that total savings will either remain the same or actually decline, despite everyone trying to save more. This counterintuitive result is why it is called a "paradox".