Multiple Choice
The Ricardo-Barro effect holds that
A) equal increases in taxes and government expenditures have no effect on equilibrium real GDP.
B) government budget deficits have no effect on the real interest rate.
C) a government budget deficit crowds out private investment.
D) a government budget deficit induces a decrease in saving that magnifies the crowding out effect.
Correct Answer:
Verified
Correct Answer:
Verified
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