How Will an Increase in the Government Budget Surplus as a Result

question 216

Multiple Choice

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 decrease by the amount of 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 be unaffected by the increase in the budget surplus.

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Definitions:

Sum

The result of adding two or more numbers or quantities together.

Reciprocal Formula

A mathematical expression used to calculate the reciprocal of a number, which is the inverse or 1 divided by that number.

Parallel Resistors

Resistors connected in such a way that there is more than one path for current to flow, affecting the total resistance of the circuit.

Total Resistance

The overall opposition to electric current flow within a circuit, typically measured in Ohms (Ω), considering all series and parallel resistances.