Government deficits mean that
A)national saving is negative so public saving is negative.
B)national saving is negative so public saving is lower than otherwise.
C)public saving is negative so national saving is negative.
D)public saving is negative so national saving is lower than otherwise.

Question

Quizplus · Accepted Answer

Public saving is equal to tax revenue minus government spending. When the government runs a deficit, it is spending more than it is collecting in taxes, which means public saving is negative. National saving is the sum of public and private saving, so when public saving is negative, national saving is also lower than it would be otherwise. Therefore, choice D is correct.

Government Deficits Mean That