A decrease in the budget deficit
A)makes investment spending fall.
B)makes investment spending rise.
C)does not affect investment spending.
D)may increase,decrease,or not affect investment spending if private saving doesn't change.

Question

Quizplus · Accepted Answer

A decrease in the budget deficit means the government is spending less money than it is receiving in revenue. This often leads to a decrease in interest rates, which can stimulate investment spending by making it cheaper for businesses to borrow money. Therefore, a decrease in the budget deficit often leads to a rise in investment spending.

A Decrease in the Budget Deficit