If the Government Begins to Run a Larger Budget Deficits

question 170

Multiple Choice

If the government begins to run a larger budget deficits, then assuming there is no Ricardo -Barro effect, the demand for loanable funds and the real interest rate .

• A) decreases; falls
• B) increases; falls
• C) increases; rises
• D) decreases; rises

---

Definitions:

Bilateral Contract

A contract type involving two parties where each promises to perform an act in exchange for the other party's act.

Consideration

In contract law, this refers to something of value exchanged between parties as part of an agreement.

Enforceable

Describes a legal agreement or obligation that can be upheld or compelled through legal processes.

Offeree

The person or entity to whom an offer is made, which can be accepted, resulting in a binding contract.