Desired national saving would decrease unambiguously if there were
A)a decrease in current output and a decrease in taxes.
B)an increase in expected future output and a decrease in 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 decrease in current output reduces income, leading to lower savings, and a decrease in taxes increases disposable income, which can also reduce savings as people may spend more.

Desired National Saving Would Decrease Unambiguously If There Were