Match each term below with the correct definition. Then, answer the question tha
ID: 1219377 • Letter: M
Question
Match each term below with the correct definition. Then, answer the question that follows. The difference between the amount the government collects and how much it spends is known as the When the term above is combined with all of the privately held savings from across the country, it is known as the If the government spends more money than it takes in through taxes, it will experience a The net amount of funds coming into a country is the If the government spends less money than it takes in through taxes, it will experience a The fundamental relationship between savings and investment spending is that... savings will increase as investment spending decreases, savings will decrease as Investment spending increases, investment spending and savings are always equal, investment spending promises higher financial returns than savings.Explanation / Answer
Government is established with the objective of maximizing welfare of the economy. For this purpose, it collects money from people of the country though taxes and revenues. It is known as income. This collected money is used in different social welfare activities. They are known as Govenrnent expenditure or investment. In the budget tax and revenues are sources of income. Excess of income over expenses is surplus. Other wise it is a defecit budget. If two are equal, then budget is balanced.
On the basis of above discussions following questions are answered.
The difference between the amount government collects and how much it spends is known as Budget Balance.
When the term above is combined with private savings it is known as national savings.
If goverment spends more monery than in through taxes, it will experience a Budget deficit.
The net amount of fund coming into the country is capital inflow.
If the government spends less money than it takes through taxation, it will experience a Budget surplus.
In an economy money saved is the excess of income over money spend in cosumption. This money is passed to inverstors as loan through finacial system. So the commodity market will be in a state of equilibrium, if savings and investment are equal. It is ideal situation to prevail in the commodity market.
Aswer: Investment spending and savings are always equal.
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