Choose the Statement That Is Incorrect

question 29

Multiple Choice

Choose the statement that is incorrect.

• A)According to the Ricardo-Barro effect, taxpayers are rational people who know that a budget deficit today means that future taxes will be higher and future disposable incomes will be smaller.
• B)According to the Ricardo-Barro effect, a budget deficit has no effect on either the real interest rate or investment.
• C)Most economists believe that the Ricardo-Barro effect holds in the market for loanable funds.
• D)According to the Ricardo-Barro effect, the quantity of loanable funds demanded increases when a government budget deficit occurs, and private saving and the private supply of loanable funds increase to match the quantity of loanable funds demanded.
• E)All of the above statements are correct.

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Definitions:

Bromination

A chemical reaction involving the addition of bromine to another substance, often used to test for alkenes or alkanes.

Reactivity

An indicator of how easily a substance reacts chemically with different materials.

Benzenesulfonic Acid

An organosulfur compound with the formula C6H6SO3H; it's a strong acid used as a catalyst and in the production of detergents and synthetic resins.

Nitrobenzene

An organic compound constituted by a benzene ring bonded to a nitro group, used in the production of anilines.