The table sets out the data for an economy when the government's budget is balanced. If the government's budget becomes a deficit of $3.0 billion and the Ricardo-Barro effect occurs, what are the real interest rate and investment? If the Ricardo-Barro effect occurs, and if the government's budget becomes a deficit of $3.0 billion, the real interest rate is percent a year and the quantity of investment is $ >>> Answer to 1 decimal place. billion. There crowding out in this situation because O A. is; investment is $8.0 billion but private saving is $11.0 billion, which means that investment is decreased by the amount of the government deficit OB. is no; the government budget deficit does not influence the real interest rate. Real Loanable funds Loanable funds interest rate demanded (billions of 2007 dollars) per year) 4 8.5 7.5 5 8.0 8.0 ini 6 7.5 8.5 7 7.0 9.0 8 6.5 9.5 6.0 5.5 (percent 9 10 supplied 10.0 10.5
The table sets out the data for an economy when the government's budget is balanced. If the government's budget becomes a deficit of $3.0 billion and the Ricardo-Barro effect occurs, what are the real interest rate and investment? If the Ricardo-Barro effect occurs, and if the government's budget becomes a deficit of $3.0 billion, the real interest rate is percent a year and the quantity of investment is $ >>> Answer to 1 decimal place. billion. There crowding out in this situation because O A. is; investment is $8.0 billion but private saving is $11.0 billion, which means that investment is decreased by the amount of the government deficit OB. is no; the government budget deficit does not influence the real interest rate. Real Loanable funds Loanable funds interest rate demanded (billions of 2007 dollars) per year) 4 8.5 7.5 5 8.0 8.0 ini 6 7.5 8.5 7 7.0 9.0 8 6.5 9.5 6.0 5.5 (percent 9 10 supplied 10.0 10.5
Chapter1: Making Economics Decisions
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Transcribed Image Text:The table sets out the data for an economy when the government's budget is balanced.
If the government's budget becomes a deficit of $3.0 billion and the Ricardo-Barro
effect occurs, what are the real interest rate and investment?
If the Ricardo-Barro effect occurs, and if the government's budget becomes a deficit of $3.0
billion, the real interest rate is percent a year and the quantity of investment is $
billion.
>>> Answer to 1 decimal place.
There
O A. is;
O
O B. is no;
crowding out in this situation because
investment is $8.0 billion but private saving is
$11.0 billion, which means that investment is decreased by the amount of the
government deficit
the government budget deficit does not influence the real interest rate.
Real
interest rate
(percent
per year)
4
5
6
7
8
9
10
Loanable funds Loanable funds
demanded
supplied
(billions of 2007 dollars)
8.5
8.0
7.5
7.0
6.5
6.0
5.5
7.5
8.0
8.5
9.0
9.5
10.0
10.5
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