If the Government Begins to Run a Larger Budget Deficits

question 107

Multiple Choice

If the government begins to run a larger budget deficits, then assuming there is no Ricardo-Barro effect, the demand for loanable funds ________ and the real interest rate ________.

• A) decreases; falls
• B) decreases; rises
• C) increases; rises
• D) increases; falls

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Definitions:

Inflated Doll

A doll that is designed to be filled with air or gas and expand, often used as a toy or decorative object.

Bandura's Study

Refers to the series of experiments by Albert Bandura that demonstrated the role of observational learning or social learning, especially the Bobo doll experiment that highlighted how children learn aggression through imitation.

Learned Helplessness

A state where an individual experiences feelings of inability to control their situation, stemming from traumatic experiences or ongoing unsuccessful attempts.

Aversive Event

An unpleasant or harmful event or experience that is avoided or minimized through learning or behavior changes.