Which of the following must be true in an economy with a government but with no

ID: 1199820 • Letter: W

Question

Which of the following must be true in an economy with a government but with no foreign trade?

A) An increase in the government deficit will force an increase in investment

B) The sum of consumption and saving will be equal to the sum of income and taxes

C) The sum of household income and business profits must be equal to the sum of consumption, government spending, and investment

D) If the government has a balanced budget, household consumption will equal the difference between income and saving

E) Household saving will be equal to investment

A) An increase in the government deficit will force an increase in investment: FALSE

B) The sum of consumption and saving will be equal to the sum of income and taxes: TRUE

C) The sum of household income and business profits must be equal to the sum of consumption, government spending, and investment: FALSE

D) If the government has a balanced budget, household consumption will equal the difference between income and saving: TRUE

E) Household saving will be equal to investment: TRUE

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