How does a change in government budget affect national saving?
A) An increase in budget deficit increases national saving.
B) An increase in budget surplus increases national saving.
C) A decrease in budget surplus increases national saving.
D) A decrease in budget deficit does not affect national saving.

Question

Quizplus · Accepted Answer

When there is an increase in budget surplus, it means the government is spending less than what it is receiving through tax revenues. This creates additional savings for the government, which in turn increases national saving. Conversely, if there is a decrease in budget surplus, it means the government is spending more than what it is receiving through tax revenues. This results in a decrease in national saving. A change in budget deficit, whether an increase or decrease, does not have a direct impact on national saving.

How Does a Change in Government Budget Affect National Saving