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

question 52

Multiple Choice

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

• A) increases the supply of loanable funds.
• B) increases private saving.
• C) decreases the supply of loanable funds.
• 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:

Economic Problem

The fundamental challenge of meeting the unlimited needs and desires of individuals with limited resources, necessitating choices and priorities in allocation.

Standard Of Living

The level of prosperity, amenities, material possessions, and basic needs accessible to a specific social class or region.

Economic Growth

An increase in a country's output of goods and services over time, typically measured by changes in real GDP, indicating improvements in living standards and economic health.

Capital

Assets or resources that are available for use in the production of further assets or goods.