A federal budget deficit _____
A) stimulates aggregate supply.
B) reduces federal debt.
C) boosts economic growth.
D) reduces national saving.
E) boosts domestic saving.

Question

Quizplus · Accepted Answer

A federal budget deficit means that the government is spending more than it is collecting in revenue, which reduces national saving. This is because government borrowing to make up the deficit reduces the amount of funds available for private investment and hence reduces national saving.

A Federal Budget Deficit _____