Asked by Rivaldo English on Jun 27, 2024
Verified
When the government budget deficit increases, national saving decreases.
Government Budget Deficit
A financial situation that occurs when a government's expenditures exceed its revenues in a given fiscal period.
National Saving
National saving, also known as domestic saving, is the sum of private and public saving, representing the part of national income that is not consumed or spent by the government.
- Analyze the effects of changes in national saving, government deficits, and real interest rates on the open-economy macroeconomic model.
Verified Answer
MK
Marcel KrolczykJul 01, 2024
Final Answer :
True
Explanation :
When the government budget deficit increases, it means the government is spending more than it is earning, which reduces public saving, a component of national saving, leading to a decrease in overall national saving.
Learning Objectives
- Analyze the effects of changes in national saving, government deficits, and real interest rates on the open-economy macroeconomic model.
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