If the Ricardo-Barro Effect Occurs, a Government Budget Deficit Raises

question 95

Multiple Choice

If the Ricardo-Barro effect occurs, a government budget deficit raises the equilibrium real interest rate by ________ and decreases the equilibrium quantity of investment by ________ if the Ricardo-Barro effect is absent.

• A)more; more than
• B)more; less than
• C)less; more than
• D)less; less than
• E)the same amount; the same amount as

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