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If the Ricardo-Barro Effect Is Present, a Government Budget Deficit

Question 27

Multiple Choice

If the Ricardo-Barro effect is present, a government budget deficit raises the equilibrium real interest rate by and decreases the equilibrium quantity of investment by than if the Ricardo-Barro effect is absent.


A) less; less
B) more; more
C) less; more
D) more; less

Correct Answer:

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