What Happens to National Saving When the Government Runs a Budget

question 26

Essay

What happens to national saving when the government runs a budget surplus? What happens to national saving when the government runs a budget deficit?

---

Definitions:

Government Bonds

Debt securities issued by a government to finance its expenditures, often backed by the government's ability to tax its citizens.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances in bank accounts.

Market Rate

The prevailing interest rate available in the marketplace on a given financial product or the current price of a commodity or service.

Open Market Operations

Central bank activities involving the buying and selling of government securities in the open market to control the money supply and influence interest rates.