If There Is No Ricardo-Barro Effect, an Increase in the Government

question 17

Multiple Choice

If there is no Ricardo-Barro effect, an increase in the government budget deficit

• A) raises the equilibrium real interest rate.
• B) lowers the equilibrium real interest rate.
• C) decreases the demand for loanable funds.
• D) decreases the supply of loanable funds.
• E) increases the supply of loanable funds.

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the last items placed in inventory are the first ones sold.

Link-Chain Method

A statistical method used for adjusting economic or financial time series data for the effects of inflation or other external factors to show real changes over time.

Dollar-Value LIFO

Dollar-value LIFO (Last In, First Out) is an accounting method used for inventory that measures the cost of inventory in dollar terms, adjusting for inflation.