How Does a Change in Government Budget Affect National Saving

question 58

Multiple Choice

How does a change in government budget affect national saving?

• A) An increase in budget deficit increases national saving.
• B) An increase in budget surplus increases national saving.
• C) A decrease in budget surplus increases national saving.
• D) A decrease in budget deficit does not affect national saving.

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Definitions:

Long Run

A time period in economic analysis during which all factors of production and costs can be variable, allowing for full adjustment to changes in market conditions.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.

Fixed Costs

Costs that do not change with the level of output or sales, such as rent or salaries.

Profit-Maximizing

The operational method a firm adopts to calculate the pricing and output that bring in the highest profit.