In the absence of the Ricardo- Barro effect, an increase in the government deficit results in a
Real interest rate and a equilibrium quantity of investment.

Question

Quizplus · Accepted Answer

In the absence of the Ricardo-Barro effect, an increase in the government deficit leads to higher real interest rates due to increased demand for loanable funds, which in turn reduces the equilibrium quantity of investment.

In the Absence of the Ricardo- Barro Effect, an Increase