The Ricardo-Barro Effect Argues That the Crowding-Out Effect

question 64

Multiple Choice

The Ricardo-Barro effect argues that the crowding-out effect

• A) is the result of a government budget surplus and higher interest rates.
• B) will not occur, because the private saving supply will change to offset any change in the government budget deficit.
• 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) is stronger when the government runs a budget surplus than when it runs a budget deficit.

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Definitions:

Size Constancy

A perceptual process by which humans perceive objects as having a constant size, despite changes in the distance from which we view them.

Retinal Disparity

The slight difference in the images projected on the two retinas, which contributes to depth perception in binocular vision.

Stereopsis

The perception of depth and three-dimensional structure obtained on the basis of visual information deriving from two eyes by individuals with normally developed binocular vision.

Figure-Ground

A perceptual principle referring to the organization of visual elements into foreground figures that stand out against a background.