Question : 51) With no Ricardo-Barro effect, a government budget surplus A) increases : 1238014

51) With no Ricardo-Barro effect, a government budget surplus

A) increases the supply of loanable funds.

B) increases the demand for loanable funds.

C) decreases the supply of loanable funds.

D) decreases the demand for loanable funds.

E) has no effect on either the supply or the demand for loanable funds.

52) Suppose the government has a budget surplus. Then

A) private saving is equal to investment.

B) private saving is greater than investment and government saving is positive.

C) private saving is less than investment and government saving is positive.

D) private investment is greater than the sum of government saving and private saving.

E) private saving is greater than investment and government saving is negative.

53) When there is no Ricardo-Barro effect, a government budget surplus ________ the real interest rate because the ________ loanable funds increases.

A) raises; demand for

B) lowers; demand for

C) raises; supply of

D) lowers; supply of

E) None of the above answers is correct because the real interest rate does not change.

54) The “crowding-out effect” refers to how a government budget deficit

A) shifts only the supply of loanable funds curve leftward.

B) shifts only the demand for loanable funds curve leftward.

C) shifts both the demand for and the supply of loanable funds curves leftward.

D) decreases the equilibrium quantity of investment.

E) increases the equilibrium quantity of investment.

55) If there is no Ricardo-Barro effect, a government budget deficit will ________ the equilibrium real interest rate and ________ the equilibrium quantity of investment.

A) raise; increase

B) raise; decrease

C) lower; increase

D) lower; decrease

E) not change; not change

56) The Ricardo-Barro effect says that a government budget deficit leads to

A) a higher real interest rate.

B) a lower real interest rate.

C) no change in the real interest rate.

D) an increase in demand for loanable funds.

E) an increase in the quantity of investment.

57) When the U.S. government launched a massive rescue plan in response to the 2008-2009 financial crisis, one of the main actions taken was to ________ because the desire was to lessen the severity of the recession by ________.

A) increase the supply of loanable funds; encouraging decrease in investment

B) decrease the supply of loanable funds; encouraging decrease in investment

C) increase the supply of loanable funds; limiting the decrease in investment

D) decrease the supply of loanable funds; limiting the decrease in investment

E) increase the demand of loanable funds; encouraging decrease in investment

58) When the U.S. government launched a massive rescue plan in response to the 2008-2009 financial crisis, the overall demand for loanable funds ________ because the ________.

A) increased; demand by households, businesses, and financial institutions increased as did the federal government demand

B) decreased; demand by households, businesses, and financial institutions changed by the same amount as the federal government demand

C) decreased; demand by households, businesses, and financial institutions decreased by more than the federal government demand increased

D) increased; demand by households, businesses, and financial institutions increased by more than the federal government demand increased

E) did not change; demand by households, businesses, and financial institutions changed by the same amount as the federal government demand

59) In 2007 the real interest rate in the United States was 2 percent. By 2013, the equilibrium real interest in the United States was ________ because the ________.

A) 3.5 percent; United States began to recover from the deep recession and financial crisis of 2008-2009

B) 0.5 percent; United States began to recover from the deep recession and financial crisis of 2008-2009

C) 0.5 percent; United States experienced a deep recession as a result of a financial crisis in 2008-2009

D) 3.5 percent; United States experienced a deep recession as a result of a financial crisis in 2008-2009

E) not yet calculated; effects of the financial crisis of 2008-2009 have not yet been tallied