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.

Question

Quizplus · Accepted Answer

If consumers save 8% of their incomes, it means that they spend 92% of their incomes. 
If the government collects $4 in taxes from each taxpayer and invests it in infrastructure, the total social investment will be $4 + (0.08 x taxpayer's income).
Since we do not know what the taxpayer's income is, we cannot determine the exact amount of the social investment.
However, we know that the increase in social investment per taxpayer will be $4 x 0.92 = $3.68 (92% of $4). Therefore, the best choice is B.

Suppose Consumers Save 8 Percent of Their Incomes