Desired national saving would unambiguously increase if there were
A)an increase in current output and expected future output.
B)an increase in expected future output and government purchases.
C)an increase in expected future output and the expected real interest rate.
D)a fall in both government purchases and expected future output.

Question

Quizplus · Accepted Answer

A fall in government purchases directly increases national saving as the government saves more. A fall in expected future output would lead to increased saving as individuals anticipate lower future income and thus save more in the present.

Desired National Saving Would Unambiguously Increase If There Were