The Ricardo-Barro effect is based on the idea that ________ when ...

[ap345]

The Ricardo-Barro effect is based on the idea that ________ when the government has a budget deficit.
 
  A) investment demand increases because expected future profits increase
  B) people decrease their private saving
  C) investment demand decreases because of the higher real interest rate
  D) people immediately increase their tax payments
  E) people increase their private saving

Question 2

When the Fed buys government securities, banks' reserves ________, the quantity of money ________, and the federal funds rate ________.
 
  A) decrease; increases; falls
  B) increase; increases; falls
  C) increase; decreases; rises
  D) decrease; decreases; rises
  E) increase; increases; rises

[vkodali]

Answer to Question 1

E

Answer to Question 2

B

[ap345]

TYSM

[yeungji]

Excellent