If household saving increases by $3 million, business saving decreases by $1 million, and the government budget deficit decreases by $2 million, then private saving ______ and public saving ______.
A) increases; increases
B) increases; decreases
C) does not change; increases
D) does not change; decreases

Question

Quizplus · Accepted Answer

Private saving consists of household and business savings. In this case, the decrease in business savings was more than offset the increase in household saving, so private savings increased. Public saving depends on the budget surplus. In this case, the government reduced its deficit by $2 million, so public saving also increased.

If Household Saving Increases by $3 Million, Business Saving Decreases