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:

Cash Collections

The process of receiving and managing payments from customers for goods or services provided.

Change Fund

A change fund is a set amount of money, composed of various denominations, used to make change for transactions in business operations.

Cash Register

A mechanical or electronic device for calculating and recording sales transactions, and an attached drawer for storing cash.

Cash Sales

Transactions where the payment for goods or services is made immediately in cash, without extending credit.