Which of the following would increase public saving?

Question

Quizplus · Accepted Answer

An increase in taxes would reduce disposable income and therefore reduce consumption spending, leading to an increase in public saving.

Answer: B 
 An increase in transfers would increase disposable income, but if the recipients choose to save rather than spend the extra income, this would also lead to an increase in public saving.

Answer: C 
 An increase in government purchases would increase aggregate demand and encourage consumer spending, which may lead to a decrease in public saving.

Answer: D
 An increase in consumption would decrease public saving, as people would be spending more and saving less.

Therefore, A and B would increase public saving, while C and D would decrease public saving. The correct answer is A and B.

Which of the Following Would Increase Public Saving