Author Question: According to the Ricardo-Barro effect, an increase in the government budget deficit A) lowers the ... (Read 47 times)

pane00 · **on:** Jun 29, 2018

According to the Ricardo-Barro effect, an increase in the government budget deficit

A) lowers the real interest rate.
B) has no effect on the nominal interest rate but does change the real interest rate.
C) shifts the demand for loanable funds curve leftward.
D) shifts the supply of loanable funds curve leftward.
E) does not change the real interest rate.

Question 2

If the Fed sells U.S. government securities to banks, the federal funds rate ________ and banks' reserves ________.

A) falls; increase
B) rises; increase
C) falls; decrease
D) rises; do not change
E) rises; decrease