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

question 256

Multiple Choice

If there is no Ricardo-Barro effect, a government budget deficit increases

• A) private savings and raises the real interest rate.
• B) the supply of loanable funds and raises the real interest rate.
• C) the demand for loanable funds and raises the real interest rate.
• D) investment demand and lowers the real interest rate.
• E) private savings and lowers the real interest rate.

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Definitions:

Stockholders

Individuals or entities that own shares in a corporation, giving them certain rights and responsibilities.

Fees Earned

Income earned by a company from its service offerings over a defined time frame.

Journal Entry

A record in accounting that notes the debit and credit movements across accounts for a particular financial transaction.

Account

A record in bookkeeping that tracks the financial transactions of a specific asset, liability, equity, revenue, or expense.