When a government has a budget surplus, the surplus
A) increases the world real interest rate.
B) helps finance investment.
C) crowds-out private saving.
D) must be subtracted from private saving to get total saving.

Question

Quizplus · Accepted Answer

When a government has a budget surplus, it means that it is collecting more revenue than it is spending. This surplus can be used to finance investment, such as building infrastructure or funding research and development, which can stimulate economic growth. Therefore, the correct answer is B, as a budget surplus helps finance investment.

When a Government Has a Budget Surplus, the Surplus