Chapter 22, Problem 3MCQ

To determine

The correct option when the federal government is said to be dissaving.

Answer to Problem 3MCQ

From the available options, the correct option is there is a budget deficit.

Explanation of Solution

A dissaving situation occurs when the government is left with nothing as it spent all the available funds and is not able to invest or save which means there is a budget deficit because the government spent more than its budgeted amount.

Whereas, budget surplus or equality in budget surplus and deficit does not show there is a dissaving situation. And, there would be no savings in this condition.

Therefore, the correct option is a (there is a budget deficit) and all other options are incorrect.

Economics Concept Introduction

Introduction: Federal government consists of three governmental bodies which involve legislative, executive, and judicial, and the powers of the government are vested under the constitution of the country U.