Question : 11) Suppose the government has a budget surplus of $2 : 1240412

11) Suppose the government has a budget surplus of $2 billion. If there is no Ricardo-Barro effect, what occurs?

A) The supply of loanable funds curve shifts rightward, lowering the interest rate, and increasing investment.

B) The demand for loanable funds curve shifts rightward, raising the interest rate, and increasing investment.

C) The supply of loanable funds curve shifts leftward, raising the interest rate, and decreasing investment.

D) The demand for loanable funds curve shifts leftward, lowering the interest rate, and decreasing investment.

E) The supply of loanable funds curve shifts leftward, lowering the interest rate, and increasing investment.

12) China’s government runs a budget surplus. As a result,

A) if there is no Ricardo-Barro effect, the supply of loanable funds curve lies to the right of the private supply of loanable funds curve.

B) interest rates should increase.

C) the Ricardo-Barro effect predicts that the real interest rate will increase.

D) the quantity of loanable funds decreases.

E) saving will exceed investment.

13) India’s government runs a government budget surplus. If there is no Ricardo-Barro effect, the surplus means that the

A) private supply of loanable funds curve lies to the left of the supply of loanable funds curve.

B) private demand for loanable funds curve lies to the left of the demand for loanable funds curve.

C) private supply of loanable funds curve lies to the right of the supply of loanable funds curve.

D) private supply of loanable funds curve is the same as the supply of loanable funds curve.

E) None of the above answers is correct.

14) If there is no Ricardo-Barro effect, when the government runs a budget surplus, it

A) competes with businesses for private saving.

B) shifts the supply of loanable funds curve leftward.

C) shifts the demand for loanable funds curve leftward.

D) contributes to financing investment.

E) shifts the demand for loanable funds curve rightward.

15) If there is no Ricardo-Barro effect, a government budget surplus ________ the supply of loanable funds and ________ equilibrium investment.

A) increases; increases

B) increases; decreases

C) decreases; increases

D) decreases; decreases

E) does not change; does not change

16) The table above gives a nation’s investment demand and saving supply schedules. It also has the government’s net taxes and expenditures. The government has a budget

A) surplus of $60 billion.

B) surplus of $20 billion.

C) deficit of $20 billion.

D) deficit of $60 billion.

E) surplus of $40 billion.

17) The table above gives a nation’s investment demand and saving supply schedules. It also has the government’s net taxes and expenditures. When the real interest rate is 4 percent, the supply of loanable funds is equal to

A) $80 billion.

B) $30 billion.

C) $50 billion.

D) $90 billion.

E) $10 billion.

18) The table above gives a nation’s investment demand and saving supply schedules. It also has the government’s net taxes and expenditures. The loanable funds market is in equilibrium when the real interest rate is

A) 4 percent.

B) 5 percent.

C) 6 percent.

D) 7 percent

E) 3 percent