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If household saving decreases by $4 million, business saving increases by $4 million and the government budget deficit decreases by $4 million, then private saving ____ and public saving ______.Group of answer choicesincreases; increasesdoes not change; decreasesincreases; decreasesdoes not change; increases

Question

If household saving decreases by 4million,businesssavingincreasesby4 million, business saving increases by 4 million and the government budget deficit decreases by $4 million, then private saving ____ and public saving ______.Group of answer choicesincreases; increasesdoes not change; decreasesincreases; decreasesdoes not change; increases

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Solution

The answer is: does not change; increases.

Here's why:

Private saving is the sum of household saving and business saving. If household saving decreases by 4millionandbusinesssavingincreasesby4 million and business saving increases by 4 million, these two changes offset each other, so private saving does not change.

Public saving is the opposite of the government budget deficit. If the government budget deficit decreases by 4million,thatmeanspublicsavingincreasesby4 million, that means public saving increases by 4 million.

This problem has been solved

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