In the long run,large and continuing budget surpluses
A) mean higher taxes and a lower standard of living
B) mean a larger money supply and higher interest rates
C) are a problem because they crowd out private spending
D) permit the government to lower taxes,thereby encouraging work,investment,and saving
E) mean a larger money supply and lower interest rates

Question

Quizplus · Accepted Answer

Large and continuing budget surpluses permit the government to lower taxes, which encourages work, investment, and saving. This can lead to economic growth and an increase in the standard of living. It is not necessarily true that budget surpluses lead to higher taxes or a lower standard of living (option A), a larger money supply and higher interest rates (option B), or a problem with crowding out private spending (option C). Option E is also incorrect, as budget surpluses typically lead to a smaller money supply and higher interest rates due to reduced government borrowing.

In the Long Run,large and Continuing Budget Surpluses