What Does the Ricardo-Barro Effect Predict

question 66

Multiple Choice

What does the Ricardo-Barro Effect predict?

• A)Government budget deficits crowd out private investment.
• B)There is no way to explain animal spirits or irrational exuberance.
• C)Net investment and gross investment will be equal.
• D)Private saving will offset the impact of government borrowing.
• E)The level of saving in a developed economy will be very low.

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