A government budget surplus from reduced government spending (no change in net taxes)will ________ the level of investment in the economy and ________ the level of total saving (private plus public)in the economy.

Question

Quizplus · Accepted Answer

A government budget surplus, achieved through reduced government spending without changing net taxes, will increase the level of investment in the economy because it reduces the government's demand for loanable funds, potentially lowering interest rates and making investment more attractive. Additionally, it will increase the level of total saving in the economy because the government is saving more by spending less, which adds to the overall savings in the economy.

A Government Budget Surplus from Reduced Government Spending (No Change