If there is no Ricardo-Barro effect, a government budget deficit increases
A) private savings and lowers the real interest rate.
B) private savings and raises the real interest rate.
C) the demand for loanable funds and raises the real interest rate.
D) investment demand and lowers the real interest rate.
E) the supply of loanable funds and raises the real interest rate.
C
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Refer to Figure 9.1. Assume the economy is initially at point A. The initial change resulting from a recession caused by an increase in oil prices is best represented by which short-run equilibrium combination of price level and real GDP?
A) P2; Y2 B) P3; Y3 C) P2; Y3 D) P3; Y2
If the cost of labor increases the isocost line will
A) stay the same. B) shift outward in parallel fashion. C) rotate inward around the point where only capital is employed in production. D) shift inward in parallel fashion.
The prisoner's dilemma game:
A. is a zero sum game. B. is a game of chance. C. is a game with a stable equilibrium. D. is a game with no dominant strategies.
Which of the following fiscal policy changes would be the most expansionary?
A. A $40 billion increase in government spending B. A $20 billion tax cut and $20 billion increase in government spending C. A $10 billion tax cut and $30 billion increase in government spending D. A $40 billion tax cut