As the consumption and saving schedules relate to real GDP, an increase in taxes will shift:
A. Upward both the consumption and saving schedules
B. Downward both the consumption and saving schedules
C. The consumption schedule upward and the saving schedule downward
D. The saving schedule upward and the consumption schedule downward
B. Downward both the consumption and saving schedules
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When economists assume that people are rational and respond to incentives, they mean
A) people act with kindness. B) people act in their own self-interest. C) people are altruistic. D) people are selfish.
Refer to the figure above. The triangular region ABC represents the ________
A) deadweight loss due to the presence of a pecuniary externality B) deadweight loss due to the presence of a negative externality C) economic loss of not recognizing a positive externality D) inefficiency created by not recognizing a negative externality