Until the onset of the most recent recession in 2009,Canadian governments (federal and provincial)had been running budget surpluses for about 10 years.Economic theory suggests that,other things being equal,these budget surpluses will lead to

Question

Quizplus · Accepted Answer

According to economic theory, budget surpluses lead to an increase in national saving. This increase in national saving leads to a decrease in interest rates, which in turn leads to increased investment and net exports. This process is known as "crowding in" of investment and net exports. Therefore, choice A is the correct option.

Until the Onset of the Most Recent Recession in 2009,Canadian