If the government budget is balanced, and saving is greater than investment, then the
A)current account must be in surplus.
B)current account must be in deficit.
C)current account balance must be zero.
D)capital account must be in surplus.

Question

Quizplus · Accepted Answer

When the government budget is balanced, it means that government spending equals government revenue, so there's no net contribution to the national savings from the government's budget. If saving is greater than investment, it implies that the domestic economy is saving more than it is investing. This excess saving is typically used to finance a surplus in the current account, meaning the country exports more than it imports.

If the Government Budget Is Balanced, and Saving Is Greater