How will an increase in the government budget surplus as a result of lower government spending (with no change in net taxes) affect private saving in the economy?
A) Private saving will increase by the amount of increase in the budget surplus.
B) Private saving will be unaffected by the increase in the budget surplus.
C) Private saving will decrease by less than the amount of increase in the budget surplus.
D) Private saving will decrease by the amount of increase in the budget surplus.
C
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If a nation uses all of its resources to produce capital goods, that will
a. force the government to increase its spending b. leave the production function unchanged c. rapidly increase the profitability of business firms d. raise income and capital gains taxes e. leave no resources available to produce consumption goods
The optimal combination of goods for a consumer to purchase is shown by
a. any intersection of the indifference curve and the budget line. b. the point where the budget line touches the vertical axis. c. a point of tangency between the budget line and the indifference curve. d. the point at which the indifference curve parallels the horizontal axis. e. the intersection of two indifference curves.