If There Is No Ricardo-Barro Effect, an Increase in the Government

question 146

Multiple Choice

If there is no Ricardo-Barro effect, an increase in the government budget surplus

• A)increases the supply of loanable funds.
• B)decreases the supply of loanable funds.
• C)increases private saving.
• D)decreases private saving.
• E)has no effect on the demand for loanable funds, the supply of loanable funds, or the real interest rate.

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Definitions:

Profit-Maximizing

A strategy or point where a business achieves the highest possible profit with its current resources and market conditions.

Short Run

A period in economics where at least one input (such as plant size) is fixed, limiting the ability of a firm to adjust to market changes.

Market Price

The current price at which a good or service can be bought or sold in a given market.

Total Revenue

The total income received by a firm from selling its goods or services before any costs or expenses are subtracted.