True or False Suppose CA 0 According to the Uses of Private

True or False: Suppose CA = 0. According to the Uses of Private Saving identity, as the government budget deficit increases, private saving (S_p) decreases. Answer true or false and explain carefully why you think the statement is true or false. Be sure to write down the identity and apply it in defending your answer. (3 sentences or less)

Solution

Government budget deficit implies shortage in government spending. Therefore, private spending has to increase.Therefore, the correct answer is false.