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

question 47

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.
• E)Private saving will increase by less than the amount of decrease in public savings.