According to the Ricardo-Barro Effect

question 52

Multiple Choice

According to the Ricardo-Barro effect,

• A)government deficits raise the real interest rate.
• B)taxpayers fail to foresee that government deficits imply higher future taxes.
• C)households increase personal saving when governments run budget deficits.
• D)government budget deficits increase households' expected future disposable income.
• E)a government deficit decreases the supply of loanable funds.

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Definitions:

Feasible Production

A concept that refers to the various combinations of goods and services that a company can produce within a specified period under given conditions with the available resources.

Bonus Payment

Additional compensation given to employees on top of their regular salary, usually as a reward for achieving specific goals or for exceptional performance.

High Skill Students

Individuals pursuing education who possess, or are being trained to possess, above-average abilities, competencies, and knowledge in a particular field or subject.

Equilibrium Prices

The prices at which the supply and demand for a good or service balance, leading to a stable market condition.