In the short run, a surplus federal budget _____
A) reduces national saving.
B) boosts domestic saving.
C) stimulates aggregate demand.
D) inhibits economic growth in the long run.
E) increases the federal debt.

Question

Quizplus · Accepted Answer

A surplus federal budget means the government is spending less than it is earning in tax revenues, which leads to an increase in domestic saving because the government is using less of the nation's savings to finance its deficit.

In the Short Run, a Surplus Federal Budget _____