Any policy designed to increase business saving will most likely
A)not affect national saving since personal saving will decline proportionally
B)not affect national saving since the resulting budget deficit will reduce government saving
C)increase national saving since personal saving will decrease by less than the increase in business saving
D)reduce national saving since personal saving will decrease by more than the increase in business saving
E)reduce national saving due to the decline in personal and government saving

Question

Quizplus · Accepted Answer

National saving is the sum of private saving (which includes both personal and business saving) and public saving (government saving). If a policy increases business saving and personal saving decreases by less than this increase, the overall effect is an increase in national saving. This is because the total private saving would increase, contributing to a higher national saving, assuming government saving remains constant or is not negatively impacted to a degree that offsets the increase in private saving.

Any Policy Designed to Increase Business Saving Will Most Likely