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

question 191

Multiple Choice

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

• A) decrease the supply of loanable funds.
• B) raise the real interest rate.
• C) lower the real interest rate.
• D) decrease the demand for loanable funds.
• E) not change the demand for loanable funds, the supply of loanable funds, or the real interest rate.

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Definitions:

Developing Economy

An economy with a low level of material well-being, often characterized by low income, inequality, poor health outcomes, and inadequate education systems.

Agriculture

The practice of cultivating the soil, growing crops, and raising livestock for human use and consumption.

Remittances

Money or goods that migrants send back to family members in their country of origin, often playing a significant role in the receiving country's economy.

Education

The process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits through various methods such as teaching, training, and research.