According to the government budget constraint equation, when the government runs a surplus, three things can happen: the money supply _____, the government _____ bonds, or the government _____ assets.

Question

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When the government runs a surplus, it means it has excess funds. These funds can be used to reduce the money supply (by not spending or by withdrawing money from circulation), to buy back government bonds (thus reducing public debt), or to purchase assets.

According to the Government Budget Constraint Equation, When the Government