The Ricardo-Barro effect is based on the idea that ________ when the government has a budget deficit
A) investment demand increases because expected future profits increase
B) people decrease their private saving
C) investment demand decreases because of the higher real interest rate
D) people immediately increase their tax payments
E) people increase their private saving
E
You might also like to view...
Thinking of a Gap store as a production plant, explain why Gap is making a decision to reduce the size of its stores. Is Gap's decision a long-run decision or a short-run decision?
What will be an ideal response?
Bans are applied to:
A. common-resource problems. B. reduce the inefficiency created by overuse. C. situations where the optimal quantity of consumption is zero. D. All of these statements are true.
Demand for a food item increases by more than the supply of the food item. One thing for certain is that
A) the price of the food item rises. B) income elasticity of demand (for the food item) is greater than 1. C) the supply curve is price elastic. D) real income rises as a result. E) none of the above
According to the quantity theory of money, if an economy produces 5,000 units of output, its money supply equals $40,000 and the velocity of money equals one, then the price level will equal:
A. $0.13. B. $1.25. C. $8. D. $200.