The effect of a government surplus upon the equilibrium level of NNP (Net National Product) is substantially the same as :

In macroeconomic theory, a government budget surplus occurs when tax revenues exceed government spending [3]. This surplus represents public saving. According to the national income identity, the equilibrium level of Net National Product (NNP) is determined by the balance of leakages and injections. Taxes (T) and savings (S) act as leakages from the circular flow of income, while government spending (G) and investment (I) act as injections [2]. A government surplus (T > G) effectively increases the total leakages in the economy, similar to an increase in private saving [4]. Both a government surplus and an increase in saving exert a contractionary pressure on the equilibrium level of NNP by reducing aggregate demand, as they represent income not spent on current domestic output [1]. Therefore, the effect of a government surplus is substantially the same as an increase in saving.

Sources

1. [3] https://www.investopedia.com/terms/b/budget-surplus.asp
2. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Box 5.1: Fiscal Policy > p. 73
3. [4] https://www.essex.ac.uk/-/media/economics/eesj/autumn-2022/831-final-project-2204198-wang.pdf
4. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > EXAMPLE 5.1 > p. 75