Which allocation of the budget surplus would lead to a slow accumulation of the nation's capital stock-eventually causing increases in consumption?

Question

Quizplus · Accepted Answer

Using the surplus to reduce the national debt would free up resources for private investment, which would lead to an increase in the nation's capital stock. Eventually, this would lead to higher levels of consumption as increased investment leads to increased production and productivity. Choices B and C would increase government spending and could lead to higher consumption in the short term, but would not necessarily lead to long-term increases in the capital stock. Choice D would decrease disposable income, leading to a potential decrease in consumption in the short term.

Which Allocation of the Budget Surplus Would Lead to a Slow