Multiple Choice
Suppose the government has a budget deficit of $2 billion. If the Ricardo-Barro effect is correct,
Then how much crowding out of investment occurs?
A) exactly equal to $2 billion dollars
B) some crowding out occurs, but less than $2 billion
C) more than $2 billion
D) No crowding out occurs and investment does not change.
E) No crowding out occurs because investment increases by $2 billion.
Correct Answer:
Verified
Correct Answer:
Verified
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