When the government goes from running a balanced budget to running a budget surplus,
A)national saving decreases,the interest rate rises,and the economy's long-run growth rate is likely to decrease.
B)national saving increases,the interest rate falls,and the economy's long-run growth rate is likely to decrease.
C)national saving decreases,the interest rate rises,and the economy's long-run growth rate is likely to increase.
D)national saving increases,the interest rate falls,and the economy's long-run growth rate is likely to increase.

Question

Quizplus · Accepted Answer

When the government runs a budget surplus, it means it is saving more than it is spending, which increases national saving. This can lead to a decrease in interest rates, encouraging investment and potentially increasing the economy's long-run growth rate.

When the Government Goes from Running a Balanced Budget to Running