A Prediction of the Ricardo-Barro Effect Is

Multiple Choice

A prediction of the Ricardo-Barro effect is

A) a larger increase in the real interest rate when the government runs a budget deficit.
B) a larger decrease in the real interest rate when the government runs a budget surplus.
C) no effect on the real interest rate when the government runs a budget deficit.
D) a larger decrease in investment when the government runs a budget deficit.
E) a larger decrease in investment when the government runs a budget surplus.