Which of the following is true of an increase in the federal government budget surplus?
A)An increase in surplus results in a decrease in the national saving.
B)An increase in surplus shifts the aggregate demand curve rightward.
C)An increase in surplus increases the federal debt.
D)An increase in surplus dampens aggregate demand in the short run.
E)An increase in surplus increases the natural rate of unemployment.

Question

Quizplus · Accepted Answer

An increase in federal government budget surplus means that the government is spending less than it is receiving in revenue. This reduces the level of aggregate demand in the short run because the government is not spending as much. Therefore, choice D is correct. Choices A, B, C, and E are false statements.

Which of the Following Is True of an Increase in the Federal