Desired national saving would increase unambiguously if there were
A)an increase in both current output and expected future output.
B)an increase in both expected future output and government purchases.
C)an increase in both expected future output and the expected real interest rate.
D)a fall in both government purchases and expected future output.

Question

Quizplus · Accepted Answer

A fall in government purchases increases national saving by reducing public dissaving, and a fall in expected future output increases saving as people anticipate lower future income, leading to increased saving today.

Desired National Saving Would Increase Unambiguously If There Were