In a Closed Economy, If Y, C, and T Remained

question 141

Multiple Choice

In a closed economy, if Y, C, and T remained the same, a decrease in G would

• A)reduce private saving and public saving.
• B)increase private saving but not public saving.
• C)increase public saving but not private saving.
• D)increase neither private nor public saving.

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Definitions:

Public Good

Refers to commodities or services that provide benefits to all members of society and whose use by one individual does not diminish the availability to others.

Public Good

Goods that once provided to one consumer, can be accessed by others without additional costs, benefiting the entire community.

Free-rider Problem

A situation where individuals consume a good without paying for it, benefiting from the good or service without contributing to its cost.

Public Good

A good that is non-excludable and non-rivalrous, meaning that its use by one person does not reduce its availability to others and no one can be effectively excluded from using it.