If there is no Ricardo-Barro effect, the govermment O A. plays no direct role in the loanable funds market because it doesn't affect either the demand for loanable funds or the supply of loanable funds. B. only affects the demand for loanable funds curve in the loanable funds market. OC. has no effect because private saving changes to offset the effect that the government's budget deficit or surplus might otherwise have. O D. increases the supply of loanable funds if it has a budget surplus and shifts the supply of loanable funds curve. O E. always has negative saving and therefore lowers the real interest rate.
If there is no Ricardo-Barro effect, the govermment O A. plays no direct role in the loanable funds market because it doesn't affect either the demand for loanable funds or the supply of loanable funds. B. only affects the demand for loanable funds curve in the loanable funds market. OC. has no effect because private saving changes to offset the effect that the government's budget deficit or surplus might otherwise have. O D. increases the supply of loanable funds if it has a budget surplus and shifts the supply of loanable funds curve. O E. always has negative saving and therefore lowers the real interest rate.
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
Problem 9P
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