econ 7.4

What is the​ Ricardo-Barro effect and how does it modify the​ crowding-out effect? According to the​ Ricardo-Barro effect, when a government budget deficit occurs​ today, ______.

saving​ increases, the supply of loanable funds​ increases, and the real interest rate does not change

Did the change in the government budget deficit crowd out some​ investment? The change in the government budget deficit​ _____ crowd out some investment because the​ _____. What happened to the quantity of saving and​ investment? The quantity of saving​ _____ and the quantity of investment​ _____.

​did; real interest rate rose ​increased; decreased

What happened to the demand for loanable funds between 2005 and​ 2009? How do you​ know? Between 2005 and​ 2009, the government budget deficit​ increased, so the demand for loanable funds​ _____ between 2005 and 2009.

increased

A government budget surplus​ _______ loanable funds. A government budget surplus​ _______ the real interest​ rate, decreases​ ______. A government budget deficit​ _______ loanable funds. A government budget deficit​ _______ the real interest​ rate, increases​ ______.

increases the supply of ​lowers; private​ saving, and increases investment increases the demand for ​raises; private​ saving, and decreases investment

The real interest rate is 9 percent a year. Investment is ​$7.0 trillion. There​ ____ crowding out in this situation because​ ____

is; the deficit increases the real interest​ rate, which decreases investment

The real interest rate is 6 percent a year. Investment is ​$7.0 ​trillion, and saving is ​$7.0 trillion. There​ ____ crowding out in this situation because​ ____.

is​ no; both saving and investment are ​$7.07.0 trillion

If the​ Ricardo-Barro effect​ occurs, and if the​ government's budget becomes a deficit of ​$3.0 ​trillion, the real interest rate is 5.0 percent a year and the quantity of investment is ​$6.5 trillion. There​ _____ crowding out in this situation because​ _____.

is​ no; the government budget deficit does not influence the real interest rate.

If the government budget surplus becomes ​$1.0 ​trillion, the real interest rate is 5.0 percent a year. ​>>> Answer to 1 decimal place. The quantity of investment is ​$6.5 ​trillion, and the quantity of private saving is ​$5.5 trillion. There​ _____ crowding out in this situation because​ _____

is​ no; the government surplus lowers the real interest rate and increases investment

The​ crowding-out effect is the tendency for a government budget deficit to​ ______ the real interest rate and decrease​ ______. A government budget deficit​ ______ the real interest rate because​ ______.

raise; investment ​raises; the demand for loanable funds increases

The ​crowding-out effect is the tendency for a government budget deficit to raise the​ _____ and​ _____ investment

real interest​ rate; decrease