Multiple Choice
-In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve.If there is no Ricardo-Barro effect, the figure shows the situation in which the government has a ________ so that the equilibrium real interest rate is ________ and the equilibrium quantity of investment is ________.
A) budget surplus; 4 percent; $1 trillion
B) budget deficit; 4 percent; $1 trillion
C) budget deficit; 6 percent; $1.5 trillion
D) budget surplus; 6 percent; $1.5 trillion
E) balanced budget; 6 percent; $1.5 trillion
Correct Answer:
Verified
Correct Answer:
Verified
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