For a given level of national income, a decrease in government tax revenues will cause

Question

Quizplus · Accepted Answer

A decrease in government tax revenues means that the government has less funding for public goods and services. This can lead to a decrease in consumer confidence and a decrease in investment. Since national saving is the sum of private saving and public saving, this decrease in public saving (caused by the decrease in tax revenues) will lead to a decrease in national saving overall. Therefore, the correct answer is (E) a decrease in national saving.

For a Given Level of National Income, a Decrease in Government