The effect of a government surplus on the equilibrium level of GDP is substantially the same as
A)a decrease in imports.
B)an increase in saving.
C)an increase in consumption.
D)an increase in investment.

Question

Quizplus · Accepted Answer

A government surplus means the government is saving more than it is spending, which is similar to an increase in saving, as both reduce the amount of money circulating in the economy, potentially lowering the equilibrium level of GDP.

The Effect of a Government Surplus on the Equilibrium Level