An increase in the budget deficit is

Question

a. a decrease in public saving.
b. an increase in public saving.
c. a decrease in private saving.
d. an increase in private saving.
e. none of the above.

Answer 1

An increase in the budget deficit means that the government is spending more than it is receiving in revenues, which typically leads to a decrease in public saving (since public saving is defined as the difference between government revenue and government spending).

Therefore, the correct answer is:

a. a decrease in public saving.