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:

LIFO Inventory Cost Method

An inventory valuation method that assumes the last items placed in inventory are the first sold during an accounting period; stands for Last-In, First-Out.

Recent Costs

refer to the latest expenses incurred by a company, highlighting the most up-to-date financial outlays for operations or projects.

Current Revenues

Earnings generated from the normal operations of a company within a specific time period.

Lower-of-cost-or-market

An accounting principle that valuables inventory at the lower of its historical cost or the current market price, ensuring assets are not overstated.