When a government has a budget surplus, the surplus
A) helps finance investment.
B) crowds-out private saving.
C) must be subtracted from private saving to get total saving.
D) increases the world real interest rate.

Question

Quizplus · Accepted Answer

A budget surplus means the government is spending less than it is earning, which allows it to use the extra funds to finance investment, either by reducing its debt (thereby freeing up capital for private investment) or by directly investing in public projects.

When a Government Has a Budget Surplus, the Surplus