Suppose Consumers Save 3 Percent of Their Incomes

question 43

Multiple Choice

Suppose consumers save 3 percent of their incomes. If the government collects 1 dollar in taxes from each taxpayer, private saving will ________ per taxpayer.

• A) decrease by 3 cents
• B) decrease by 97 cents
• C) increase by $1
• D) increase by 97 cents

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Definitions:

Primacy Effect

The inclination to recall facts at the start of a list more effectively than the details that come afterward.

Prisoner's Dilemma

A scenario in game theory where two individuals acting in their own self-interest do not produce the optimal outcome for either party.

Cooperation

The process of groups or individuals working together towards a common goal or benefit.

Competition

The activity or condition of striving against others for the purpose of achieving a goal, victory, or superiority in a field.