What Does the Ricardo-Barro Effect Predict

question 217

Multiple Choice

What does the Ricardo-Barro Effect predict?

• A) The level of saving in a developed economy will be very low.
• B) There is no way to explain animal spirits or irrational exuberance.
• C) Private saving will offset the impact of government borrowing.
• D) Government budget deficits crowd out private investment.
• E) Net investment and gross investment will be equal.

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Definitions:

Vital Capacity

The maximum amount of air a person can exhale after a maximum inhalation, used to assess the health of respiratory systems.

Expiratory Reserve

The volume of air that can be forcefully exhaled after the end of a normal tidal expiration.

Intercostal Muscles

Muscles located between the ribs that aid in the process of breathing by controlling the expansion and contraction of the chest cavity.

Elevate Ribs

The action of lifting the ribs through muscle contraction, which increases the volume of the thoracic cavity to aid in inhalation.