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

Question

Quizplus · Accepted Answer

An increase in taxes would lead to a decrease in private consumption (C), but since Y and G remain the same, national saving (S) would remain unchanged. However, public saving (T-G) would increase, leading to an increase in overall saving in the economy. Therefore, only public saving would increase, and the correct choice is D.

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