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If the Government Runs a Budget Deficit to Fight a War

Question 165

Multiple Choice

If the government runs a budget deficit to fight a war and there is no Ricardo-Barro effect, what is an impact of the deficit?


A) the quantity of private saving decreases
B) firms purchase more capital equipment
C) animal spirits or irrational exuberance is created
D) the real interest rate rises
E) the quantity of investment increases

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