Refer to the diagram for a private closed economy. The MPC and MPS are:

The economic way of thinking will help you

A) make decisions in financing your home. B) decide whether the U.S. government should encourage or discourage immigration. C) make better decisions concerning your education. D) all of the above

Many environmentalists have advocated a substantial increase in the gasoline tax to cut down the federal deficit and to reduce pollution due to auto emissions. Such a tax increase would be devastating to people who commute significant distances to work. In fact, it would provide an incentive to relocate closer to work or change jobs. Economists refer to such effects of taxes as the

A. burden of a tax. B. regressive incidence of a tax. C. incidence of a tax. D. excess burden of a tax.