In the late 1990s, the U.S.federal government had a budget surplus.If there is no Ricardo-Barro effect, the budget surplus ________ the real interest rate and ________ the equilibrium quantity of investment.

Question

Quizplus · Accepted Answer

Without the Ricardo-Barro effect, a budget surplus would lower the real interest rate, making borrowing cheaper and thus increasing the equilibrium quantity of investment.

In the Late 1990s, the U