Question

If household saving decreases by $4 million, business saving increases by $4 million, and the government budget deficit decreases by $4 million, then private saving __________ and public saving __________.

Answer 1

Answer:

private saving does not change and public saving increases

Explanation:

given data

household saving decreases = $4 million

business saving increases = $4 million

government budget deficit decreases = $4 million

solution

as we know Budget deficit = G - T

and

public saving = T- G

so here we can say deficit decreased means the public saving increased

and

here Private saving is  = sum of saving of households + sum of saving of businesses   ....................1

Private saving = -4 + 4

Private saving = 0

so that here private saving does not change

private saving does not change and public saving increases