Evidence to Support the Ricardo-Barro Effect Would Show That

Multiple Choice

Evidence to support the Ricardo-Barro effect would show that

A) higher government budget deficits decrease investment.
B) higher government budget surpluses decrease investment.
C) government budget deficits increase household consumption.
D) government budget deficits have no effect on the real interest rate or investment.
E) higher government budget deficits raise the real interest rate.