If There Is No Ricardo-Barro Effect, a Government Budget Surplus

question 238

Multiple Choice

If there is no Ricardo-Barro effect, a government budget surplus ________ the supply of loanable funds and ________ equilibrium investment.

• A) increases; increases
• B) increases; decreases
• C) decreases; increases
• D) decreases; decreases
• E) does not change; does not change

---

Definitions:

Sensation-seeker

An individual who seeks out experiences that are varied, novel, complex, and intense, often at the risk of physical or social safety.

Extreme Sports

Sporting activities that involve high levels of risk, adrenaline, and excitement, often performed in exotic or challenging environments.

Arousal

A state of physiological and psychological wakefulness, alertness, and activation.

Drive-reduction

A theory in psychology that explains behavior as motivated by the desire to reduce internal drives, such as hunger or thirst, to maintain homeostasis.