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Other things equal, when the government runs a large budget deficit, it _________ national saving and thereby _________ capital formation and productivity growth. a. increases; increases b. increases; decreases c. decreases; increases d. decreases; decreases

Chapter 36, Problem 10

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QUESTION:

Other things equal, when the government runs a large budget deficit, it _________ national saving and thereby _________ capital formation and productivity growth.

a. increases; increases

b. increases; decreases

c. decreases; increases

d. decreases; decreases

Questions & Answers

QUESTION:

Other things equal, when the government runs a large budget deficit, it _________ national saving and thereby _________ capital formation and productivity growth.

a. increases; increases

b. increases; decreases

c. decreases; increases

d. decreases; decreases

ANSWER:

Step 1 of 2

Saving:

Saving refers to a part of the income not used to consume goods and services—the savings classified into public savings and private savings. The sum of public and private savings is called national savings.

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