According to the Ricardo- Barro Effect

Multiple Choice

According to the Ricardo- Barro effect,

A) a government deficit decreases the supply of loanable funds.
B) households increase personal saving when governments run budget deficits.
C) government deficits raise the real interest rate.
D) taxpayers fail to foresee that government deficits imply higher future taxes.
E) government budget deficits increase households' expected future disposable income.