The Figure Given Below Represents the Leakages and Injections in an Economy

question 45

Multiple Choice

The figure given below represents the leakages and injections in an economy.
Figure 10.3
In the figure:
S₁ and S₂: Saving functions
I: Investment
G: Government spending
EX: Net exports
-In Figure 10.3, which of the following represents the paradox of thrift?

• A) A shift of the saving curve from S₂ to S₁.
• B) A shift of the saving curve from S₁ to S₂.
• C) A change in equilibrium from e₂ to e₁.
• D) A change in equilibrium real GDP from $300 to $400.
• E) A change in equilibrium real GDP from $100 to $400.

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Definitions:

Progressive

Pertaining to a form of taxation in which the tax rate increases as the taxable amount increases, typically applied to income tax.

Regressive

A term describing a tax system where the tax rate decreases as the taxable amount increases, imposing a greater burden on lower-income earners.

Federal Taxes

Taxes levied by the federal government on income, investments, and goods and services, which fund national programs and services.

State And Local Taxes

Taxes levied by individual states and localities, which can include income, sales, property, and other types of taxes.