According to the Ricardo-Barro effect, government deficits
A) lead to a rise in the equilibrium real interest rate, crowding out investment.
B) lead to simultaneous increases in private saving and have no effect on the equilibrium real interest rate and investment.
C) lead to simultaneous decreases in private saving and decreases in the equilibrium real interest rate and investment.
D) lead to a fall in the equilibrium real interest rate and an increase in investment.
E) raise the real interest rate but have no effect on the nominal interest rate.
Correct Answer:
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A)equal increases in
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