If the public consumes r₁00 billion less and the government purchases r₁00 billion more (other things unchanging), which of the following statement is true?
A)Saving is unchanged.
B)There is an increase in saving and the economy should grow more quickly.
C)There is a decrease in saving and the economy should grow more slowly.
D)There is not enough information to determine what will happen to saving.

Question

Quizplus · Accepted Answer

The decrease in public consumption is offset by an equal increase in government purchases, leaving overall spending unchanged, so saving remains unchanged.

If the Public Consumes R₁00 Billion Less and the Government