Question

When the government's budget deficit increases the government is borrowing less and public savings increases.

Answer 1

The given statement is false.

Government budget deficit occurs when government spending exceeds its income.  When government deficit increases, debt increases. This is because a deficit would need to be funded by additional borrowing. Thus, borrowing increases.

Public saving is national income less consumption and government spending. When deficit increases, government spending increases and public savings decline.

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