According to the definitions of national saving and private saving,if Y,C,and G remained the same,an increase in taxes would
A)raise both national saving and private saving.
B)raise national saving and reduce private saving.
C)leave national saving and private saving unchanged.
D)leave national saving unchanged and reduce private saving.

Question

Quizplus · Accepted Answer

An increase in taxes would lead to a decrease in disposable income and reduce private saving since people would have less money to save or spend. However, it would not affect national saving since it is the sum total of private and public saving. Therefore, national saving would remain unchanged while private saving would decrease.

According to the Definitions of National Saving and Private Saving,if