Suppose Consumers Save 8 Percent of Their Incomes

question 81

Multiple Choice

Suppose consumers save 8 percent of their incomes. If the government collects 4 dollar in taxes from each taxpayer and invested it in infrastructure, total social investment will ________ per taxpayer.

• A) increase by $ 4.32
• B) increase by $3.68
• C) increase by 32 cents
• D) decrease by 64 cents

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, representing an excess return over and above normal profits.

Price Takers

Firms or individuals who accept the market price as is because they do not have enough market power to influence the price of the goods or services they sell.

Downward-Sloping Demand

A concept in economics that indicates demand for a good or service decreases as its price increases, assuming all other factors remain constant.