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:

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Wason Selection Task

A logic puzzle that demonstrates the difficulty people have in testing rules in a rational or logical way, often used in the study of deductive reasoning.

Propositional Rule

A statement in logic that expresses a relationship between concepts through propositions or declarative sentences.

Prefrontal Cortex

The part of the frontal lobes of the brain located at the front of the frontal lobe, involved in complex behaviors such as planning, decision making, and moderating social behavior.