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:

Obedience

The act of following orders or instructions from an authority figure, often studied in psychology to understand the extent and limits of control over human behavior.

Normative Social Pressure

The influence of other people that leads an individual to conform in order to be liked and accepted by them.

Group's Power

The collective capacity of a group to influence, control, or direct individuals or outcomes based on group cohesion, size, and resources.

Stanley Milgram

A psychologist best known for his controversial experiments in the 1960s on obedience, which highlighted the power of authority figures to compel individuals to perform actions against their personal conscience.