Currently, the US has a total consumption of $12 trillion, saving of $6 trillion, tax revenues of $5 trillion, and government spending of $7 trillion. Relative to a balanced budget, the government’s actions in this economy will cause: a. Higher interest rates today and reduced economic growth for future generations. b. Lower interest rates today and reduced economic growth for future generations. c. Higher interest rates today and enhanced economic growth for future generations. d. Lower interest rates today and enhanced economic growth for future generations.

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Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.