The Ricardo-Barro Effect Argues That the Crowding-Out Effect

question 41

Multiple Choice

The Ricardo-Barro effect argues that the crowding-out effect

• A) is stronger when the government runs a budget surplus than when it runs a budget deficit.
• B) is the result of a government budget surplus and higher interest rates.
• C) is the result of the government budget deficit and higher interest rates.
• D) will occur, because the private saving supply will change to offset any change in the government budget deficit.
• E) will not occur, because the private saving supply will change to offset any change in the government budget deficit.

---

Definitions:

Encoding Failure

A situation where information does not get stored in long-term memory due to insufficient encoding during the learning phase.

Source Amnesia

A memory disorder where one can recall certain information but is unable to remember where, when, or how they learned that information.

Working Memory

The part of short-term memory that is concerned with immediate conscious perceptual and linguistic processing.

Sensory Memory

The shortest term element of memory, it is the ability to retain impressions of sensory information after the original stimuli have ended.