France's Government Is Running a Budget Deficit

question 42

Multiple Choice

France's government is running a budget deficit. With no Ricardo-Barro effect, which of the following events will occur?
I. The supply curve of loanable funds will shift leftward.
II. A higher real interest rate crowds out investment.
III. Saving increases.

• A) I and II
• B) II and III
• C) I only
• D) III only

---

Definitions:

Short-range Plans

Plans created to achieve or accomplish goals or objectives within a short time frame, typically less than one year.

Technology Adoption

The process by which individuals and organizations begin to use and integrate new technology into their operations.

Free Trade

An economic policy that allows imports and exports between countries with minimal or no tariffs, quotas, subsidies, or prohibitions to encourage international trade.

Tied Aid

A form of foreign aid that requires the recipient country to spend the funds in the country of the donor or in a group of specified countries.