A prediction of the Ricardo-Barro effect is
A) a larger decrease in the real interest rate when the government runs a budget surplus.
B) no effect on the real interest rate when the government runs a budget deficit.
C) a larger decrease in investment when the government runs a budget deficit.
D) a larger increase in the real interest rate when the government runs a budget deficit.
E) a larger decrease in investment when the government runs a budget surplus.
B
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In the long run, when factors are mobile, an increase in the relative price of a good will increase the real earnings of the factor used intensively in the production of that good. This is known as:
a. the HeckscherOhlin model. b. the StolperSamuelson theorem. c. the Riparian model. d. the specificfactor theorem.
If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices, how do you calculate the CPI?
What will be an ideal response?