When there is no Ricardo-Barro effect, a government budget surplus ________ the real interest rate because the ________ loanable funds increases
A) lowers; supply of
B) lowers; demand for
C) raises; supply of
D) raises; demand for
E) None of the above answers is correct because the real interest rate does not change.
A
You might also like to view...
Suppose Richard Branson withdraws $5 million from his checking account at Bank of America. If the required reserve ratio is 25%, what is the maximum change in deposits in the banking system?
A) -$25 million B) -$20 million C) -$5 million D) -$1.25 million
Countercyclical fiscal policy has a serious problem with
a. overshooting the desired impact by a factor of 10. b. the irreversibility of actions. c. the tendency of the Federal Reserve to immediately counter Congressional action. d. the courts as it has been held to be unconstitutional. e. overshooting the desired impact by a factor of 3.