If there is no Ricardo-Barro effect, an increase in the government budget deficit
A) lowers the equilibrium real interest rate.
B) decreases the demand for loanable funds.
C) increases the supply of loanable funds.
D) decreases the supply of loanable funds.
E) raises the equilibrium real interest rate.
E
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Failure to account for the increased transportation costs that would result from building fewer and more centrally located production facilities could result in firm managers selecting a scale of operation that is larger than the optimum
Indicate whether the statement is true or false
Which of the following was NOT a cause or a characteristic of the 1994/95 Mexican peso crisis?
A) An overvalued exchange rate B) An inflow of large foreign portfolio capital C) The inability of the IMF, the world bank, and the NAFTA member countries (i.e., the United States and Canada) to predict the looming financial crisis D) Shifts by the world capital markets toward more conservative and risk-averse investments because of interest and exchange rate movements around the world