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.

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