When Government Saving Is Negative

question 9

Multiple Choice

When government saving is negative,

• A) investment increases.
• B) the real interest rate falls if the crowding- out effect applies.
• C) the real interest rate decreases if the Ricardo- Barro effect does not apply.
• D) the real interest rate increases if the Ricardo- Barro effect does not apply.

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Definitions:

Economic Foundation

The base or underlying economic conditions and resources that support the growth, development, and sustainability of an economy or sector.

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