If the public consumes €100 billion less and the government purchases €100 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

When the public consumes less and the government spends more by the same amount, the overall level of spending in the economy remains unchanged, so saving is unchanged.

If the Public Consumes €100 Billion Less and the Government