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If the Government Begins to Run a Larger Budget Deficits

Question 107

Multiple Choice

If the government begins to run a larger budget deficits, then assuming there is no Ricardo-Barro effect, the demand for loanable funds ________ and the real interest rate ________.


A) decreases; falls
B) decreases; rises
C) increases; rises
D) increases; falls

Correct Answer:

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