Multiple Choice
Suppose the government has a budget surplus of $2 billion. If there is no Ricardo-Barro effect, what
Occurs?
A) The supply of loanable funds curve shifts leftward, lowering the interest rate, and increasing investment.
B) The supply of loanable funds curve shifts leftward, raising the interest rate, and decreasing investment.
C) The demand for loanable funds curve shifts rightward, raising the interest rate, and increasing investment.
D) The demand for loanable funds curve shifts leftward, lowering the interest rate, and decreasing investment.
E) The supply of loanable funds curve shifts rightward, lowering the interest rate, and increasing investment.
Correct Answer:
Verified
Correct Answer:
Verified
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